In August of this year, we took an exciting step forward by launching the popular cTrader Copy service alongside our core cTrader offering. Although this story has already been picked up by media like Finance Magnates, until now, we have not said much on the matter.
Spotware touts this platform as a social trading tool. That doesn’t mean you should paint it with the same brush as eToro or ZuluTrade; it’s much more than that. Forget how Spotware markets it to the retail trading community and discard your thoughts that it is nothing more than a gimmicky fad for brokers to market to newbies. In fact, in an earlier post, we highlighted the benefits that hedge funds, institutional and professional traders could extract from retail trading technology, and cTrader Copy is another bold example of that.
As a provider of solution for fund managers, At Scandinavian Capital Markets, we recognised the advantages that cTrader Copy can bring to our mature and demanding clientele. This post is to tell our clients and partners more about cTrader Copy means for you.
cTrader Copy, as the name might suggest, is a copy trading tool for cTrader; it’s a feature of the cTrader Web application. The feature allows users to benefit from either copying trades between their own accounts or the accounts of other individuals. cTrader Copy also provides detailed strategy profiles that offer actionable analytics, key performance indicators and a journal of trading history.
Spotware, the development company behind cTrader, emphasises that cTrader Copy offers numerous improvements over legacy MAM/PAMM systems for MT4, and we’re inclined to agree with them. Here are a few points we would like to highlight to any FX money managers trying to decide between various MAM solutions for MetaTrader 4 or alternatives.
Different MAM systems have different functionality, drawbacks and advantages. The comparisons in this section are based on generalisations of classic forex MAM and PAMM systems for money managers/fund managers.
One of the biggest concerns investors have over managed products is transparency, especially with leveraged products. Investors will be worried about execution transparency, spread markups, the risk profile of the strategy and accurate reporting of return on investment.
Suppose investors in your trading strategy are following through cTrader Copy. In that case, they will be able to view the overall performance of your strategy and the performance of their sub-account following yours, which will show performance beginning from when they started following.
Investors will also appreciate the plethora of information the interface displays;
Another convenience that will give your investors peace of mind is they can access their money at any time without any red tape and without affecting the fund in any way whatsoever. There are no entry or exit fees influencing decisions.
If an investor wants to start small for the first couple of months with a plan to allocate more capital in the future, it can be done quickly. On the other hand, if an investor wants to pull out for any reason, there is no need for awkward conversations, they can stop following, which will close trades in their sub-account and allow funds to be withdrawn. Similarly, your investors can remove a portion of their capital at any time, providing their balance remains higher than the minimum investment amount required to follow your strategy.
Because investors are able to add and remove funds as they please, and money managers are, in fact, trading their own money, there are no complex requirements when it comes to onboarding new investors. As long as an investor has a live Scandinvaivian Capital Markets cTrader account and has the link to find your strategy profile in cTrader Copy, they can start following with just a couple of clicks.
Most MAM solutions only allow fund managers to charge volume fees. While volume fees are generally the best approach for being remunerated as it keeps the interests of both parties aligned, a one size fits all policy doesn’t afford flexibility. cTrader Copy also supports volume fees and management fees.
While the volume fees might not be of much interest, the management fees offer the opportunity for money managers to earn even when they aren’t in positions. Management fees are a reasonable fee, as not trading at inopportune times is essential to a healthy strategy. Analysing the markets and deciding there are no valid trades also takes time and cTrader Copy allows you to be compensated for managing accounts too.
After reading all of this, there is probably one concern you have left; ‘how can I keep my fund away from the eyes of the retail trading community’? Well, you can just turn your strategy to private mode, and it will not be visible to the cTrader community. The only way to discover your strategy will be via a unique link that you send to your investors.
cTrader Copy is well-positioned to become a breakthrough solution for fund managers and asset managers. If you’re interested in learning more about how you can launch your managed FX service via cTrader Copy or you are considering migrating to this exciting alternative; get in contact with one of our relationship managers.