Undertaking a major change in the compensation model of its leaders, ZuluTrade announced that it will drop the profit rates from the accounts of the followers. The radical change in the compensation model is in line with the new management approach to make ZuluTrade more friendly and forward-looking by reducing costs and increasing quality and transparency on the platform.
that of ZuluTrade current profit sharing model pays traders (aka leads) who provide signals that are automatically copied into the follower’s account. The follower pays $30 as subscription fee per month per account and pays the leader 25% of the profits earned in his account in a month. As such, the higher the profits on a follower’s account, the higher the leader’s compensation. The 25% Performance Fee is paid only for the months closed with profits.
However, on the other hand, if the follower’s account suffers a loss in the following months, the leader is not charged for the loss incurred. This implies that the followers put money to a leader and share their rewards, but they do not really share the risk in the long run with the leader. Also, this means that the long-term impact of the client’s performance can be significant due to added costs of profit sharing.
Thus, the popular psychology behind the profit sharing model claiming that you only pay when you earn a profit looks good only on paper. Another challenge the followers face is when they have more than one account or more than one leader they are following.
Suppose a follower follows two leaders where one leader makes money while the other loses money in which cumulative aggregate P&L is negative. In this case, the follower will share part of his winnings with the winning strategy leader and will not receive fees for the loss obtained on the losing strategy. Again, this does not justify a fair scenario for the follower.
Considering all these scenarios, ZuluTrade is ready to make significant changes in how followers are charged. The company will remove the profit shares from the follower’s account from 1St January 2023 and actually immediately no one will be able to open a new profit account. ZuluTrade will also drop the $30 subscription fees paid to profit-sharing accounts and make it Zero.
Tajinder Virk, CEO at ZuluTrade, said: “Finvasia can create a value-driven system and has revolutionized the Zero Commission ecosystem. This move further cements Finvasia’s efforts
Adding to the comments, Sarvjeet Virk, co-founder of Finvasia Group, said: “We are excited about the direction in which ZuluTrade is evolving, and I see important changes coming in the coming months that will put our investors at the center of our product.”
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