Collective2 Review

Collective2 Review

Collective2 is a trading service that enables you to connect your brokerage account and choose from a selection of trading strategies to copy to your trading account. It is an automated trading solution that is continually evaluating and ranking new strategies.

Collective2 describes itself as “anti-hedge fund” due to the fact that they require a smaller investment, have flat monthly fees and your money remains in your account, rather than the account of the hedge funds manager.

In fact, the Collective2 founder goes as far as saying that hedge funds stole money from their father and that is why they started Collective2. They want to replace the entire hedge-fund industry with their own software platform. Interesting, now let’s take a look at exactly how it works…

How does Collective2 work?

How Collective2 Works
How Collective2 Works

The principle behind Collective2 is very simple. You simply choose the trading strategies that you would like to copy and they are linked to your brokerage account. The process works as follows:

  1. Select a strategy on Collective2.
  2. Connect your brokerage account.
  3. Watch trades as they happen.

Collective2 Features

If you are interested in investing in hedge-funds, but don’t want to lock up large amounts of capital or deal with the politics that can come with certain funds, the Collective2 Platform will let you trade hedge-fund strategies in your own brokerage account, at investment sizes you are comfortable with. With the money staying in your account.

Collective2 Strategies
Collective2 Strategies

Some of the key features of the Collective2 copy trading solution include:

  • Choose from a range of strategies to copy to your account.
  • Money stays in your brokerage account at all times.
  • Start and stop at any time.
  • U.S.-regulated company, based in New York.

Collective2 Strategies

There is a decent range of trading strategies available through Collective2. They are always reviewing strategies and adding more that meet their minimum requirements. The website mentions that over 51,000 investing strategies have been evaluated so far with over $50 million being invested into Collective2’s platform. They have over 100,000 registered users at the time of me writing this Collective2 review.

Collective2 Strategy Overview
Collective2 Strategy Overview

There are strategies to cater for different trader preferences, including various risks, trading styles and trading instruments. You can filter and choose the strategies according to the statistics that matter the most to you. There is no limit to the amount of strategies that you can copy.

Each Collective2 strategy displays the performance over the period of time it has been running. However, it is very important to keep in mind that past results are not indicative of future results. Trading will always carry an element of risk and you can lose money. Whilst there are plenty of strategies on Collective2 that have performed well, there are equally as many that have failed miserably.

Collective2 Strategy Manager

Collective2 Platform
Collective2 Platform

The Collective2 Platform allows you to manage assets through a regular brokerage account, or through your favourite trading software. If you have your own strategy and are a strategy manager, you can put it forward to Collective2 to see if they will implement it within their platform. You can be up and running in minutes, not months.

Your customers trade in self-directed brokerage accounts, pay flat fees, and keep funds under their own control, so there’s minimal regulatory hassle to get up and running.

You’ll be paid a flat fee for every “subscriber” who replicates your trades. There are no performance fees, no high-water marks, no off-shore or on-shore entities, no partnerships or corporations. Just trading! You can charge subscribers any amount you like, but the “sweet spot” according to them, seems to be between the $49 and $199 monthly price point. Most strategies offer free trial periods.

Collective2 Strategy Details
Collective2 Strategy Details

Once you start signing up subscribers, they will take care of all the transaction processing. Collective2 pay Trade Leaders (strategy managers) 50% of any subscriptions you collect through them. Included for strategy managers:

  • Offer Auto trading to subscribers.
  • Broadcast signals via email, Instant Messenger, or cell phone.
  • Private forum for your subscribers.

Another factor to consider is the amount of capital required to follow your strategy. When you begin a strategy on Collective2, you’ll be asked to choose its starting “Model Account” size. When choosing Model Account size, make sure you take into account the margin needed, position sizing, and typical drawdown. Strategies that require more than $50,000 may be less popular than those that can be followed with a smaller capital amount.

Collective2 Strategy List
Collective2 Strategy List

To be fair, Collective2 are offering a way to get started in the asset management industry for those who would not be able to otherwise, for whatever reason. Breaking into the world of asset management has always been challenging. Aspiring managers can use the Collective2 Platform to build a verifiable track record and get paid in the process. Later, they can use their Collective2 track record as a calling card for potential investors.

To manage assets on the Collective2 Platform, you can create a Model Account, which your investors will follow. From there, you can manage your Model Account in several ways:

  • Enter buy and sell trades using the WebTrader platform, just as you would with any other broker.
  • Use the Collective2 PlatformTransmit technology to connect your preferred trading platform such as MetaTrader, TradeStation, NinjaTrader, to your C2 Model Account.
  • Use the RESTful API to roll your own code.
  • You can also manage your Model Account at Collective2 via email.
  • Connect your own brokerage account using the BrokerTransmit technology to drive your Model Account. This will replicate whatever happens in your brokerage account so that the same buys and sells happen in your Collective2 Model Account. Then, in turn, your subscribers will replicate your Model within their brokerage accounts. This will automatically earn you the “Trades Own Strategy” certification, which comforts potential subscribers that you have your own real money on the line.
Top-earning Strategy Developers
Top-earning Strategy Developers

On Collective2, your trading strategies Intellectual Property (IP) is protected. This is due to the fact that it is kept on your side and you never have to show it to them. The methodology that you utilise for generating your buy and sell signals remain in your hands at all times. You simply place the trades and they share the results.

Collective2 Pricing

Anyone can try Collective2 as a Strategy Manager with a 14-day free trial. There is no credit card required whereas you can cancel, upgrade, or change plans at any time. They have plans for all levels and types of Trade Leaders and Investors. These are the plans and prices for being a Strategy Manager on Collective2:

Starter Plan

  • $19 per month
  • Published strategy in C2 marketplace
  • Instant auto trading at supported brokers
  • Subscriber management tools
  • Promote strategy with social sharing links
  • Manage 1 strategy
  • Futures or Forex
  • Starting model portfolio size: $10,000
  • Enter and manage signals: C2 Webtrader web interface
  • Compensation: 50% pay out of subscriber fees
  • Email support

Basic Plan

  • $39 per month or $390 annually (15% saving)
  • Published strategy in C2 marketplace
  • Instant auto trading at supported brokers
  • Subscriber management tools
  • Enhanced management tools
  • Promote strategy with social sharing links
  • Strategy track record reset ($30 reset fee)
  • Manage 1 strategy
  • Stocks, Options, Futures or Forex
  • Starting model portfolio size: $50,000
  • Eligible for Featured Strategy Status
  • Eligible for C2Star Certification
  • Enter and manage signals: C2 Webtrader or connectors
  • Compensation: 50% pay out of subscriber fees
  • Live chat and email support

Premium Plan

  • $99 per month or $990 annually (15% saving)
  • Published strategy in C2 marketplace
  • Instant auto trading at supported brokers
  • Subscriber management tools
  • Enhanced management tools
  • Promote strategy with social sharing links
  • Strategy track record reset ($30 reset fee)
  • Manage 3 strategies
  • Futures or Forex
  • Starting model portfolio size: $250,000
  • Eligible for Featured Strategy Status
  • Eligible for C2Star Certification
  • Enter and manage signals: C2 Webtrader web interface, connectors, BrokerTransmit, Seetu, email or API
  • Compensation: 50% pay out of subscriber fees
  • Phone, live chat and email support

Supported Brokers

The Collective2 technology is compatible with a range of trading brokerage firms. Remember that the broker you choose can depend on the type of strategy you want to trade. To trade a forex strategy, for example, you’ll need a broker that allows forex trading. Available brokers include Interactive Brokers, Gain Capital, Tradovate and Oanda.

Supported Platforms

Collective2 support a growing list of platforms, with more being added as they continue to grow. Keep in mind that the platform you choose can depend on what kind of strategy you want to trade. For example, to trade a forex strategy, you’ll need a platform that allows forex trading.

In most instances, these platforms apply to Strategy Managers. Investors do not require a specific platform or need to have any software running to AutoTrade strategies on Collective2.

C2 PlatformTransmit connectors have no broker requirements and let you manage a model portfolio strategy on Collective2 using a Simulated account.

C2 BrokerTransmit allows you to submit signals to Collective2 using a broker platform (e.g. IB Trader Workstation) with a live brokerage account. Simulation accounts are not permitted with BrokerTransmit.

The current support platforms include MetaTrader, C2 WebTrader, NinjaTrader, TradeStation,

What makes Collective2 different from hedge funds?

Collective2 claim to be everything a hedge fund is not. The principle of Collective2 is basically to have your account managed by traders running their own strategies. This is similar to the way a traditional hedge fund works, with a few main differences.

Firstly, the minimum investment with Collective2 is as low as $5K for certain small strategies. Although it is generally, between $20K and $100K. However, some hedge funds require millions to get involved.

Secondly, Collective2 charge a flat monthly fee whereas you will tend to pay a % of profits to a hedge fund.

Finally, with Collective2, your money always stays in your account. With a hedge fund, you are handing your money to the hedge-fund manager, and trusting them to return it.

Collective2 Summary

Collective2 have been around since 2001 and are based in the United States. They are registered with the CFTC as both a CTA and an IIB, whilst they have been members of the NFA since 2008. Despite this, Collective2 themselves state that “the outcomes can be extreme variable – with the possibility of losing everything… but also the possibility of doing very well”. This is the case with any automated trading system.

Collective2 Company Timeline
Collective2 Company Timeline

That being said, they have a user-friendly interface and range of trading strategies to choose from. They also accept new strategies from those of you who are looking for a platform to publish yours on. Collective2 is used by thousands of investors looking for emerging managers and strategies

I believe that there are many good traders out there who are under the radar, perhaps due to being introverted or living in obscure locations. They may have spent thousands of hours perfecting a trading strategy based on complex market analysis that they have developed from the ground up.

Services such as Collective2, give them a platform to share their unique strategy with the rest of the world. This is in comparison to a hedge fund manager who may just be following what came before or what is the common thing to do.

I therefore conclude for myself, that some of the strategies available through Collective2, would certainly be worth a closer look. Especially if someone does not have the time nor knowledge to produce a trading strategy themselves.

One initial concern for me would be the reliability of using a scalping system on the Collective2 platform. Why? Well, scalping systems generally need tight spreads and rapid trade execution speeds at the best possible prices. If an order has to be routed through a strategy providers platform, to the Collecttive2 platform and then to the investor’s platforms, there could be a significant discrepancy in prices that could affect the performance of scalpers. That is without taking into account any broker slippage.

You do not need a live (“real-money”) brokerage account to manage a trading strategy on Collective2. If you do have a live account that you are trading your strategy on, this will be displayed, which can give investors confidence that you are putting your money where your mouth is.

Furthermore, if you do have a live brokerage account at a compatible broker, you can use the BrokerTransmit technology to “run your strategy” (submit buy and sell signals) by simply trading in your broker account, as you normally do.

Hopefully this Colelctive2 review has provided you with the information you need to decide if it is something you would like to try, whether that be as an investor or strategy manager. There is a Collective2 blog, podcast and range of tutorial videos where you can get further information.

Either way, keep a look out for the creepy dancing robot on the Collective2 website!

All results are hypothetical. Trading is risky, and you can lose money. Collective2 is not appropriate for everyone. If you can’t afford to lose money, C2 probably isn’t right for you. Please see important warnings and disclosures on the Collective2 website.

Collective2

From $19
8

Functionality

8.0/10

Usability

8.0/10

Versatility

8.0/10

Features

  • Autotrading Strategies
  • Strategy Managers
  • Multiple Trading Platforms
  • Various Trading Instruments
  • Any Broker
  • • Subscriber Management Tools
  • Easy To Use
  • Free Trial
  • Established in 2001
  • USA Regulation