Hello, Elite Trader Humans: We've streamlined the process of becoming a Trade Leader at Collective2. Now you can earn extra income selling your trading strategy on Collective2, and you can even use your existing (compatible) brokerage account to do it. Here is the streamlined process: https://collective2.com/landing/leader - C2 P.S. "Compatible" currently means: Interactive Brokers, MBTrading, OptionsHouse, Gain Capital / OEC. Other brokers kinda maybe oughta will-be compatible in the hazy, indeterminate future, depending on things like: customer demand, ocean tides, and Christmas gifts offered by brokers to C2 staff.
I'm not sure if it is appropriate to ask this question here, but under what circumstances do you think a person who has a profitable trading strategy would want to sell it versus just using it himself? Its an honest question because I fail to understand what incentive there is for the trader if a strategy is actually good and consistently profitable.
That's a fair question, and it's one that is asked of me a lot. But it's also asked of hedge funds and CTAs a lot. Why allow other people to benefit from your trading strategy? If it's so great, why not trade it yourself, and only yourself? There are a few reasonable answers. First, selling your trading system is an (indirect) form of leverage. Essentially: you can earn more money with the same amount of your own capital. This is because market liquidity is generally very vast. Unless you have infinite capital (and no one does), or unless you are trading a strategy that takes advantage of a very small market anomaly (few people are), you won't single-handedly exhaust the opportunity that your trading strategy presents. Yes, you'll be able to make money (hopefully) with the trading capital that you have available in your own account, but you'll also earn additional amounts from other people's capital -- either through the two-and-twenty hedge funds charge, or the monthly subscription fee you earn as a strategy publisher on Collective2. Second, there's an opportunity to build a verifiable track record on Collective2, which you can in theory show to people down the road if you ever want to start a fund or want to raise capital. (I don't have any readily available data on how often C2 strategy developers are "discovered" by hedge funds or CTAs, but I suspect it does happen, if rarely). Finally, I'd be disingenuous if I didn't suggest a third reason people post their good strategies on Collective2. Of course there's some desire for risk reduction. This applies to hedge funds, too, by the way. After all, hedge funds earn their 2% management fee, no matter how much they stink up the place. Something similar can happen at C2: you do well for a while, you attract subscribers, and - if you've earned their confidence - your subscribers will probably grant you a few months of runway if your performance is sub-par for a short period. But I think this is a very minor piece of people's motivations. This is because, in both cases -- hedge funds and C2 -- the grace period won't be long. Investors and traders flee very quickly when performance is sub-par. Anyway, you can check it out more here: https://collective2.com/landing/leader
Well said k p. And do the owners of Collective2 pour their trade-skimmed profits back into their own system by also following the top signal providers? Because it's a sure thing, right? It's not that the SEC approves of what's going on in your bid'ness. It's just that they won't do anything about it until enough events occur to raise their level of interest. Well, either that or something really embarrassing happens to someone or something which matters to them. Hello Human Collective2 person, enjoy the Wild West of the at-homer trading market...while you still can!
Actually, KP's question is a rather stupid one. The opposite is true, why WOULDN'T any profitable trader want to INCREASE his profits by selling it on C2? That is the correct question. You see if you trade C2 AND your own exactly the same way: 1. You actually provide a backing to your trades since others follow your order, thus your little buy suddenly becomes a bigger buy. And eventually that can turn sentiment... 2. In months when you are down or breakeven, you still get an extra income. Nice, isn't it? 3. You have a public profile and you just never know when a big guy with big capital will call you based on your PR, provided by C2. 4. If you have limited capital, you are basicly increasing that with no extra risk. How nice... I am sure there are other reasons, but these should do it... So Steve, what is your reason NOT to sell your strategy on C2???
The simple old fact and truth that if you make money trading you do not need to sell your strategy online. It would be more plausible to open your own trading firm. The fact is that only a handful of people can make a living by trading while the vast majority is selling you something usually advices and strategies that are almost useless. I looked at C2 and there are very few " advisors " that have been around 5 years and even fewer that have been published their performance for 10 years and are still doing it now. Looks like financial gurus and female porn stars share a very common trait. A very high and fast turnover of people. That's why C2 is here hunting for "new meat". While they have plenty of " Trade Leaders and Trade Followers " more and more are always welcome. In other words: KP question is smart. What is stupid is to assume that C2 along with automated trading will solve your financial problems. I have nothing against C2 or their business model, but it is what it is. Just my 2 cents.
If you make money as a professional athlete you don't need to sign advertising deals. Oh wait, wrong analogy... You don't need to, but people like easy money... A better response would be, that the pay off might not worth the effort for the trader, but if it is little work and doesn't interfere with the trading, and there is good extra money to be made, then there is no reason not to do it...
For a discretionary trader, probably yes. For anything more systematic you run the risk of giving your strategy away, there are some fairly bright minds reverse engineering anything that works.