Yes, I’ve read the post from Matthew that states the regulators demand the effect of system fees by default. System Fees Now Included in Charts
But why is there no option to see performance charts without fees?
It´s actually really bad and wrong to substract system fees directly from the performance chart without giving another option and here is why:
- it´s not directly withdrawn from the broker account so the fee is not reducing the balance
- that way the fee is not influencing compounding rates of a system which is extremely important in the long run (assuming that it is continously paid from the credit card)
- Fees also dont enlarge the real maximum drawdown (because point 1) but currently they have that effect on systems.
- it gives a very wrong and misleading impression if the follower’s account size doesn´t match the model account size
Easy example:
- model account =100k
- Follower account = 10k
- Trade scaling 10%
- system performance before fees EoY = 12%
- fee = 100$/month
In that example the model account would show a year end performance INCLUDING fees of 10.8% but the Follower would have actually made NO (ZERO) money after fees.
It´s the other way around if the subscriber has a larger account than the provider. That way smaller model accounts have to either charge less fees or they systematically look worse than a bigger counterpart with the same performance.
With the current way of including fees you enforce developers to open model accounts as big as possible so the effect of fees is minimized. At the same time you fool investors with smaller accounts who feel safe when looking on a chart that includes fees. I´m absolutely sure there are always some newbies around who actually fall into this trap so they loose money on a system that shows a profit. Just because they trusted the chart that includes fees regardless of their account size.
So my suggestions are:
- include an option in the drop down menu on the strategy page that does not include fees (but include trading commissions).
- Add an input box beside/below the dropdown menu where you can put in your desired AutoTrade scaling -> draws a chart including fees that reflects the trade scaling so small and big investors alike see a good estimate of what to expect after fees.
- Also a coloumn in the grid with performance before fees would make sense in my opinion but probably not top priority.
@MatthewKlein Please take these concerns seriously because this site is about money. The mathematics and options given should be correct, versatile and fitting their purpose.
kind regards,
Alex
