One of the important factors to consider when choosing a good signal provider (SP) is a cost of their service.In general there are 2 types of signal provider services.
1. Paid from spread fee - you pay for their service from spreads of each trade
2. Paid from monthly subscription fee - when choosing this kind of provider, you pay one monthly flat fee, regardless number of trades during month.
The question is which option to choose.
Well, that depends on your starting capital, lot size and signal provider´s behavior.
Let´s do some comparations.
Example #1:
SP# 1
spread fee: 2 pips
monthly trades: 25
avg. monthly profit: 100 pips
according to his drawdown and your risk settings your lot size : 1 minilot
your starting capital : $1,000
So you earn 100 pips which when using 1 mini lot is approx. $100 monthly profit.
You pay 2 pips fee/trade . There is 25 trades a month so you pay 50 pips in fee, that equals about $50.
Your profit is $100 - $50 in fees = $50/month
SP# 2
monthly fee: $50
monthly trades: 25
avg. monthly profit: 100 pips
according to his drawdown and your risk settings your lot size : 1 minilot
your starting capital : $1,000
So you earn 100 pips which when using 1 mini lot is approx. $100 monthly profit.
Monthly fee is $50, so your total profit for month is $100 - $50 = $50
As you can see in this example results are same.
But what if your starting capital was $5,000? Let´s see in example #2
Example #2 :
SP# 1
spread fee: 2 pips
monthly trades: 25
avg. monthly profit: 100 pips
according to his drawdown and your risk settings your lot size : 5 minilots
your starting capital : $5,000
So you earn 100 pips which when using 5 mini lot is approx. $500 monthly profit.
You pay 2 pips fee/trade . There is 25 trades a month so you pay 50 pips in fee, that equals about $250. (remember your lot size is 5 mini lots now)
Your profit is $500 - $250 in fees = $250/month
SP# 2
monthly fee: $50
monthly trades: 25
avg. monthly profit: 100 pips
according to his drawdown and your risk settings your lot size : 5 mini lots
your starting capital : $5,000
So you earn 100 pips which when using 5 mini lots is approx. $500 monthly profit.
Monthly fee is $50, so your total profit for month is $500 - $50 = $450In this example we get a huge different result when SP#2 brings you $200 more in total monthly profit.
Now, do not assume that monthly fee is better if you have larger account. Always consider all factors like: your starting capital, risk management, your lot size, fee, SP´s behavior (profit, drawdown, number of trades).
If you are looking for good signal providers here are some services that offer thousands of good SPs to choose from:
Spread fee:
Zulutrade
You can see my complete SP Zulutrade portfolio here
Monthly fee:
ZipSignals
My SP portfolio on ZipSignals is CalmXTrader - TrendFollower (search for me)
RentASignal
