HERE are two innovations that allow traders who have developed a successful strategy or system to make money from it. Zignals and eToro approach things from different directions, but both are interesting developments for traders.
The beauty of the eToro CopyMe system is in its simplicity. If you have a tempting strategy, traders can simply click on a button to follow you.
Of course, successful traders profit by revenues from their trades going the right way. But the CopyMe system allows traders to achieve an additional income from the number of people who follow them.
eToro is very much a social media experience. Traders are listed in the same way that you would see on Twitter and users can discuss with each other – for example asking why somebody had decided to go long euro-dollar.
When somebody clicks on you, they can see how successful you have been and also how many followers you have had historically. Obviously, the more successful a trader you are, the more people follow you. eToro chief executive Johnathan Aissa has said that users feel that being watched helps traders to keep on their toes – questioning deeper why they made a particular trade, knowing that if it goes wrong they will lose followers.
GETTING YOUR CASH
eToro users are compensated by the number of unique copiers they aquire each month. 50-100 will earn you a bonus of $500 going up to a bonus of $7,000 for 701-750 unique followers.
If you like to have a multitude of tools available and to be able to constantly tweak and refine your strategy, Zignals is an attractive proposition – both as a source of endless information for traders and a way that they can earn money from a well crafted system.
Zignals allows you to build your own “black box” trading strategy via its StrategyStudio – it then sends alerts to your PC or mobile phone, meaning that you always know what’s going on. The system uses a five step drag and drop process, building rule flows and applying risk management through trail stops and targets. Signals are generated through a pool of stocks. Using the Screener tool, publishers can either build up a set of stocks as the source of their signals or use ETFs or FX. It seems a bit daunting to start from scratch, but the system offers default settings that can later be tweaked. According to Declan Fallon, senior market technician for Zignals, the advantage of the “always on” approach of the StrategyStudio is that a subscriber doesn’t depend on the strategy publisher to create signals – he says that this means that there is no risk to the subscriber of being left in the lurch if the publisher stops maintaining the strategy. Additionally, all signals generated must have a defined target and stop – the strategy publisher is free to change targets and stops over the lifetime of the trade.
Subscribers searching for a strategy can search the database based on a number of metrics. Fallon gives the example of a subscriber looking for a US based strategy with a win percentage of 60 per cent or more, costing less than $15 a month with an initial risk on each position of 10 per cent or less.
GETTING YOUR CASH
Once it goes live, any Zignals member can subscribe to the strategy.
Any subscription earns the publisher 50 per cent share of the fee. Zignals sells purchases in blocks of three, six and 12 months. A $10 a month strategy sold for three months will earn the publisher $15. When the publisher earns at least $100 in sales, they will be paid via Paypal.