Why would anyone want to pay to share a trading system if it is any good?
huh?
For the answer read a book called ‘The Why Cafe’ by John Strelecky
C2 charges developers to share their trading systems with strangers who pay a small subscription fee to use it. If the developers trading system was profitable then why would any developer bother to share it? He/she would just trade with it and become rich. C2 doesn’t make sense to me. What am I missing?
You are thinking one dimensionally. Read about utility or economies of scale to give you a different perspective. You need to think of it as a business, in terms of your own time and energy relative to income.
Subscriber fees are passive income to a vendor. If you could earn in sub fees exactly the same as you could make trading your system risking your own capital, which do you think would make more sense?
"Why share it?"
One reason to lease a trading system is to increase personal returns through compounding. For example:
1. A trader w/ a $100,000 account develops a system that makes 20% per year w/ a reasonable drawdown.
Trading just his account he makes $20,000 per year w/ reasonable risk.
2. The same trader leases his system to 10 subscribers for $100/mo
The trader makes $20,000 per year trading and $12,000 per year on subscriptions. The trader’s return is increased by over 50% by leasing his system and next year, (assuming his wife is working and paying all the bills : ) his trading account will be $132,000. Now say that the following year he picks up 10 more subscribers based on his performance and at the end of the year he’s at $182,400. In the first case w/o leasing he would only be at $144,000.
By leasing his system, our trader has almost doubled both his absolute and relative returns.
The compounding feature of leasing systems is why systems are leased and why hedge funds and investment partnerships exist.
–h
Seeing to what the others said:
1) Trading is about risk. If someone has a system that is in drawdown phase, any subscription fees counterbalance the loss to him. It is a type of diversification
2) Many times, a system has a limited life - based on current market behavior. Getting whatever he can out of the system while it works makes sense. There are few systems that work long term, in all market conditions.
3) Some people like to teach or build a business.
4) Some people prefer developing and selling systems, rather than the stomach-churning experience of being a trader
5) Some people start out with a good system and small amounts of trading capital. The system can build their account so they themselves can trade.
The reality is though, not many systems work. But if it does, the system developer is the one who chooses how to use it., But there are plenty of reasons why he may choose to sell it
