Commissions and Fees
Collective2 is a unique social trading platform. Collective2 offers to its users a way to match up traders and followers as well as many other interesting tools. Read our in-depth review to learn all about Collective2 and decide if they are right for you.
Collective2 is a social trading platform that matches up traders (Strategy Manager) and followers (Investors) with tracking and auto-trading services through a subscription service model. The platform enables investors to monitor and subscribe to independent trading strategies as well as auto-trade (copy trade) them for a monthly fee. Traders operate their own strategies and collect monthly payouts based on their active subscribers. Collective2 seeks to discover the best trading talent and make their trades accessible to willing investors and subscribers. While the site states “Start a hedge fund without starting a hedge fund.”, I find that’s a bit of a stretch. There is no resemblance to the hedge fund model as there are no direct (accredited) investors, performance fees, regulatory filings or compliance. However, traders can arguably develop a verifiable track record through the Collective2 platform.
Collective2 (C2) has various fee plans depending on whether you sign up as a Strategy Manager/Trade Leader or Investor or both. Trade leaders have a 14-day free trial and Investors can create a free account to explore strategies.
Strategy Managers also referred to as Trade Leaders pay a $19 to $39 monthly fee to list a single strategy or $99 to list up to 3 strategies. There is an additional $105 fee for each additional strategy added within a month. There are bulk volume discounts available for traders who list 10 or more strategies. C2 also takes 50% of subscriptions fees it collects on behalf of the trader. Supported trading platforms include C2 Web Trader, Interactive Brokers, Tradovate, Neotic, Tradestation, Ninjatrader and Metatrader.
Investors (investors or subscribers) pay subscriptions fees to the strategies they sign up for. Many strategies offer seven-day free trials. Investors don’t have platform requirements for strategies but can sign up with Preferred Brokers to receive discounts on auto-trade fees. Monthly strategy subscriptions range from $20 to $200. Prepaid annual discounts are also available.
Auto-trading requires plan membership with vary fees depending on brokers and type of financial instrument (stocks, options, FX or futures). It’s important to make sure your brokerage account is compatible. C2 accommodates taxable U.S. trading accounts for stocks and options and IRA retirement accounts (but no short-selling or naked options strategies). Auto-trading plans range from the Solo $49- month plan that auto-trades a single trade strategy to $299 Portfolio Plus monthly plan for unlimited strategies and scaling up to 10X. Keep in mind strategy subscriptions are independent of auto-trade subscriptions.
Collective2 Features Breakdown
C2 serves traders who can collect subscription fees for trading their strategy and investors who follow and copy the trades manually or via auto-trade (similar to eToro’s copy trading). Different features apply to traders and investors.
C2 continuously updates the strategy leaderboard indicating the top performing Trade Leaders. This is the epicenter of the action as top performing traders get the best exposure with investors looking for profits. Users can sort the list by many categories and variables to determine which traders to follow. Users can also add strategies to watch lists just by clicking the Add to Watchlist tab.
The easiest way for Trade Leaders to transmit trade signals is through the BrokerTransmit feature. This requires setting up the trading account at a compatible brokerage. Once configured, then trades entered in your trader brokerage account is automatically transmitted to subscribers and posted onto C2. Subscribers who have signed up for auto-trading with compatible brokers will also have the trades executed in their accounts to mimic the Trade Leader trading activity.
Caveat for Trade Leaders
While there are no registration or licensing requirements for U.S. Trade Leaders, the most important restriction is to never provide personal individualized financial advice. Non-personal comments published to a subscribers like “Buying SPY on a breakout through $296” is fine. However, e-mailing an individual “Bob, you should buy the SPY at $296.02 for your IRA account as we discussed earlier, because I think it’s undervalued at that price level.” is a violation.
The strategies are the main products on C2. Investors can scroll through and select the strategies they find compelling. They can add select strategies to watch lists and auto-trade in simulated or real accounts. Every strategy provides detailed performance data including annual returns, number of trades, max drawdowns and percentage of winning trades and months. Strategy description and a cumulative history of every trades made since inception is also provided. Users can opt to simulate the strategy which will add it to the trade simulator or opt to subscribe to get full-access and auto-trading options.
Investors who opt for auto-trading with their compatible broker have the flexibility to configure parameter per strategy. Users can select the type of financial instruments to trade (Stocks, Futures, Forex or Options) and Max Trade Size. Stop-Loss parameters can be configured as well as enabling for Short Options positions, which can be extremely risky. Shorting options, aka naked options positions require level 3 options permissions for most brokers and are susceptible to margin calls and automatic forced liquidations. Always check with broker and make sure you have enough funds in the account to meet margin requirements.
As a social trading platform, there’s many ways to interact with the community. The Reviews tab shows star-based ratings as well as comments by date so investors can gauge the top-rated strategies to consider following. To write a review for a strategy, investors but have subscribed to the strategy service for at least 30-days. The Forums are message boards where members can post comments for various trading topics. Users can also Message trade leaders directly with questions or comments. Again, Trade Leaders are prohibited from giving individualized investment advice.
All investor accounts come with a free simulator to test out a strategy or combination of strategies before subscribing. This enables investors to be financial alchemists experimenting with strategy combinations to help diversify risk or compound performance. Users can swap out different strategies, asset classes or allocation mixes to create the most optimal portfolio.
Depending on type of membership plan, customer support service is available via e-mail, chat or phone service.
Collective2 Platform Differentiators
C2 is unique as a “copy-trade” platform as it caters to stocks and options as well as futures and forex. Most competitors focus on just futures and forex. C2 is arguably the largest social trading platform with auto-trade capabilities. The simulator accounts are a good way to kick the tires. The biggest differentiator is the membership plan based auto-trading instead of a per-trade fee structure. This separates C2 very clearly as a membership network rather than a broker-dealer and keeps SEC scrutiny away.
Is C2 a Good Value?
For traders, C2 is a good value IF you have solid performance and have the capacity to cover the costs. As the competition grows stiffer with more Trade Leaders, it becomes tougher to gain a following, unless performance is excellent. For investors, C2 is a good value for the subscriptions and simulator account. If considering auto-trading, it’s prudent to be familiar with underlying strategies and continue to keep an eye on the activity. Larger accounts should consider multiple strategy portfolios to stay diversified, especially for market downturns.
What Type of Trader Is Collective2 Best For?
Trade Leaders should be seasoned traders and strategists with a track record of successful performance and solid risk management. Investors should be familiar with the asset classes, investment vehicles and able to follow the trades are best suited. While auto-trading seems passive, it’s imperative that investors continue to monitor their accounts and adjust risk settings as needed. C2 is for experienced traders and investors, newbies are best left to start off with robo-advisors first before expanding into new strategies.
- Caters to experienced traders and investors
- Strategy performance transparency with complete stats and itemization of trades
- No SEC filings or complicated paperwork filings
- Free trial periods and simulator to kick the tires
- Monthly auto-trading membership fees instead of per-trade fees
- Social trading features like star-ratings and reviews by customer-only ensure accountability and credibility
- Multiple trading instruments including stocks, options, futures and forex