Best Practices for Strategy Providers in cTrader Copy
Many Strategy Providers don’t make wise choices when running their strategies causing them to miss potential Investors and additional income. Below, we describe a few ways that can add value to you and help you to build a professional profile as a Strategy Provider.
It’s common sense that Strategy Providers are afraid to share their strategy by posting a clear description. However, nobody cares for the parameters, math, algorithms, models, etc. Investors just want to copy you and earn profits, not to discover what’s behind your strategy!
Investors can see the leverage in the Strategy Provider’s summary page, however it would be great if you give extra information about it. Make it clear to the Investors, what’s the minimum leverage required for the strategy to be effectively copied.
Minimum investment is related to leverage. It’s a common idea that Investors want strategies with a low minimum investment, as a result Strategy Providers sometimes are influenced in their decision and recommend a low amount that doesn’t suit well with their strategy. Since it is an equity to equity model the risk is the same. The main problem is that Investors cannot open positions when there is not enough margin causing their accounts to become out of sync with the strategy. Hence you need to make sure that somebody following you with the minimum investment is able to follow your trades.
A good idea is to inform the Investors about your recommended minimum investment for a minimum leverage. In addition, in case things go wrong and a higher minimum investment is essential, then keep your Investors updated.
Focus on your strategy
What Strategy Providers should have in mind is the ranking system of cTrader. It’s a proprietary method used to rank strategies in a comprehensive way, taking many parameters into consideration.
However, what we always recommend to Strategy Providers is to stay focused on their strategy, not on the ranking system. Of course, everybody wants to be a Top ranked Strategy Provider, but keep in mind that Investors don’t follow or check only the Top 10 Strategy Providers! They set specific parameters using the filters and look for them among the Strategy Providers!
- Do not over-risk your trading account in order to achieve a too high ROI, since the ranking system takes into account the Equity Based ROI. It considers the amount of funds that the Strategy Provider used to achieve the ROI result, i.e. how much of the Provider’s own funds were used for each 1% of ROI. The average value is used.
- Give your best to have as many profitable months as possible. This parameter allows evaluating the long term success of a strategy. At the same time, try to keep your max. DD as low as possible. Don’t forget that it’s hard to gain Investors’ trust for the long term. Once you gain it, then it’s hard for them to unfollow you. It’s not an easy process for Investors to look around for good Strategy Providers all the time. It takes time, and once again, time is valuable!
- The more funds you invest in your own strategy, the higher the strategy will show the rank. Investors find fair enough when Strategy Providers invest their own funds in their strategy too. It shows that you believe in your strategy and want to earn by your trading activity, not only by fees.
You are free to set your desirable fee structure, but think that many Investors are discouraged by the fee structure of the Strategy Providers. Of course, you know how to evaluate your strategy, however sometimes Strategy Providers set too high fees for their strategies, so copying them becomes impossible. Be careful, so you do not fall into the trap of non-reasonable fees!
Performance fee is a payment made to a Strategy Provider for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A standard practice among hedge funds is “20% and 2%”, meaning 20% performance fee for high-water-mark and 2% management fee. Evenmore, there is a volume fee too, however we wouldn’t suggest setting management fee plus volume fee to your strategy. It’s common sense that plenty of traders prefer Strategy Providers using performance fee instead of volume fee structure as long as they find this structure fee more attractive and fair enough for both sides.
cTrader Copy Platform offers a variety of possibilities for marketing the strategy. A good idea is to share your strategy profile with your friends. It’s easy to gain their attention and maybe their trust as well. Then, start promoting your strategy to your social media and build a community.
Direct links to a strategy can be generated from the sharing menu to the top of a strategy profile. It’s the best tool for sharing your strategy with your friends in Facebook or Instagram or why not with your professional connections in LinkedIn!
The strategies can be shared with the Investors in two ways — among all traders without any restrictions, or traders with invitation links only. In the first case, the strategies can be searched and discovered from the Strategies list or shared via public links. In the second — the traders with private one-time links only can follow them.
Another easy way to get more and more Investors is using the embedded code provided in the sharing options. Your strategy profile will be published on the web with all the charts and tables including your current open positions updated in real-time. Clicking on the Start Copying button will redirect an Investor to your strategy in cTrader Copy, where he will be able to start copying it.
Community plays a major role in copy trading. Become a leader in your community!
To sum up
To sum up, one of the most significant benefits of copy trading is that no previous trading experience is required for the Investors.
Investors care more about trust, as long as they can copy your strategy with one button! We love to say that copy trading is built on trust, not in trading systems. There are millions of strategies out there, but only a few Strategy Providers that you can trust in the long term. Keep your community updated and let them know about the current circumstances in your trading activity or your upcoming movements when things go wrong.
To give yourself, as a Strategy Provider, a better chance of long-term success, give your best to gain their trust!