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Why offering free strategies?


#1

I am really wondering why does some developers offer their strategies for free? Isn’t that anti capitalism. No one one on C2 needs a handout.

Please no sarcasm or bad comments. I just need to understand why someone would put so much pressure on themselves for nothing. Especially everyone on C2 is trying to make money.

One more thing. Is what a developer charges for a strategy is relevant?

@OSUTAI
I am interested in what you think.


#2

Here is a few reason I can think of

1.they want exposure, who doesn’t want something for free. C2 use to allow trial time. Did that get removed?

  1. Is the developer hope to get a bunch subscriber on the free month, then automatically renew for the months after. It’s very common.

  2. Yes I believe the cost of the strategy matters. It all depend on your capital. If you only have $10k to invest, will you pay $500 a month on fees? Some diversify between many strategies, it can add up to $1000+. Also supply and demand, there are many good c2 strategy charge between $100-$200. If a new strategy comes along asking for $500-$750 a month. Then I definitely will wait and see if it’s worth the money. From my experience its never worth it.


#3

Thank you for your reply. I think I saw some strategies that the developers do not ask for any money at all. I understand offering a month or two for free.

I understand strategies that ask for higher fees are expected to produce constantly good. All I am saying the cost of picking a bad strategy might cost much more than the monthly fee. That is why I think the cost is irrelevant.


#4

That comment doesn’t make sense. Would you pay $2000/monthly for a strategy that will lose money?

At least if someone pays $100/month for a losing strategy they can just cancel it quickly before they lose more money from losing trades. If you paid $2000/monthly it would hurt much more to cancel the strategy that lost maybe $1000 in losing trades.

But anyways, if you think you can charge a high fee for your strategy then go ahead and give it a try. Who knows you may succeed as I have seen some developers charge $1000/month before and then disappear. Thats called making a quick buck off of subs.

Its actually rare that a strategy will survive with that cost since the stress of performing usually ends up disastrous…

I do agree that capital preservation is more important than the fees but to lose both would be extremely distasteful.


#5

Some developers start off with their system being free hoping that they will develop a following of subscribers with the goal of changing from free to reasonable price later on so just because you see systems that are free now doesn’t mean they will always be free. I agree that it would be odd for a developer to offer a system for free forever.

Your point that the subscription fee is largely irrelevant as compare to the profit or loss a system can generate is correct however there doesn’t seem to be a strong correlation between the subscription fee and the results so given that most people don’t want to add insult to injury and pay a high subscription fee for a system that isn’t profitable, or worse losing them money.

Most people prefer mutual funds with no-load fees but similar to the point you make, the performance of the fund is more important than such fees, however no one like starting out in the hole with large fees.

If someone did come to C2 and develop a great long-term track record with real trades and show that they can stick to their stated money management rules they probably would be able to command a loyal following of subscribers who would pay a high subscription fee. I think you will find that such a system is rare here and the reasons shouldn’t be hard to figure out.


#6

If a developer offers his strategy free for a limited time that indicates to me that he has confidence that his strategy will succeed and that he is not out for a quick buck, and of course he wants to attract subscribers. The longer the time period he offers it for free the better in my opinion. I recently subscribed to a strategy which is free until 1/1/19 and it paid already off. Don’t ask me which strategy it is otherwise OSUTAI will accuse me again of promoting relatively new strategies here.


#7

Thank you @Pete for the good points you made


#8

I believe you are correct stating the cost of sub fees and strategy performance are not correlated but still, cost is very relevant and important. My approach with C2 is to attempt to preserve and increase my capital. I view sub fees and the C2 autotrade license fee as an expense of doing business. I want my capital to pay me a return which covers those expenses and, beyond that, provide excess cash which is my net return on capital invested.

I track the sub fee and prorate the C2 autotrade license fee between various strategies I trade and this is subtracted from the return generated by a strategy, if any, each month. If one expects a strategy to pay its own way and generate a decent return then high fee levels can have a significant impact.


#9

Yes @CoreyR I agree with you. Of course trading costs needs to be minimized.


#10

I’d agree with @KarlA that a developer that does this is probably not in it for a quick buck, or at least a super quick buck.

I can also bet that some (who shall not be named) offer it free for a very short period in the hopes that the system might do ok and the subscribers would just forget or shrug and decide to pay for the listing. It’s a psychological thing. Mentally more walls to invest in a strategy with a fee that you haven’t tried, than in one you’ve been investing in for free and is doing ok. Just my thoughts there.

What a developer charges is certainly relevant. $500 strategies IMO would require a much longer time period for me to consider than a $50 one. If I’m paying someone $600 a year I want a good return on my investment. If I’m paying someone $6,000 a year I want something really unique and special.

Of course if you’re throwing around 500k per strategy it’s all a moot point anyway :smile: