Covestor: Outsourcing Money Management

ForexNewsNow | Published on November 1, 2012 at 8:34 am

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ForexNewsNow – Covestor is a money management service that allows people to invest their money in the actions performed by highly experienced money managers and stock traders. The service permits people to follow and automatically copy the actions taken by very experienced money managers and online traders. This way users of this service are able to generate income without actually having to evaluate the market themselves.

Covestor has been founded in 2007 by a group of trading enthusiasts and market professionals. Since then the company has expanded and now features a full staff as well as a board of directors consisting of highly experienced traders and business professionals.

How Covestor Works

Covestor is essentially a mirror trading platform. It allows users of this service to mirror certain highly experienced traders. This means that the Covestor platform will follow the accounts of the selected traders in real time and copy the trading decisions taken by them. In plain language, Covestor users will be able to automatically copy the actions performed by highly experienced stock traders and institutions.

After registering at Covestor, users will be presented with a list of traders they will be able to follow. This list can be filtered by applying certain filtering settings. Users of the service will be able to select different investment models, different assets for trading, management types, and trades performed only in distinct business sectors.

This way users will be given the opportunity to only select those investors to follow that are performing in a business segment that is familiar to the user. Users will also have full access to investors’ trading history. The trading history also contains data about the overall success rate of each individual investor.

Covestor has a very large selection of investors that traders are able to follow and mirror. All these investors have been hand-picked, meaning that only those listed have a real track record and professional expertise and experience in the trading business. The investors that users will be able to follow are actual trading professionals and high-profile business people.

How Much does Covestor Cost and How does it Make Money?

Covestor will charge a fee of $5 per month per subscription. The number of subscriptions denotes the number of investor accounts the user has decided to follow. Covestor also charges a fee between 0.5% and 2% on the profits that have been earned by the user. This rate will be split 50/50 between Covestor and the professional trader that the user has decided to follow.

This basically means that both Covestor and the professionals that act as signal providers only earn money in case users are earning money as well. In case users are not making any profits, then no party involved will make any profits. It’s in the interest of Covestor and the trading professionals that users earn money.

More than this, the trades performed by the trading professionals users can follow are real trades made with real money. It’s in the best interest of the trading professionals and managers available at Covestor to make profits because they are actually trading with their own money. In case they take bad decisions, it won’t be only the 0.25% or 1% commission they will lose, it will be their own money invested in their own trading accounts.

How Much Money Can A User Earn?

The amount of money a user can earn greatly depends on the investment as well as the types of professionals and trading models followed. Each of the trading professionals that can be followed consistently generates revenues and returns of investment of up to 100% and more.

Users will have the possibility to choose and follow signal providers (also called as Model Managers at Covestor) based on their risk factor. Signal providers that generally perform trades with a very low risk generate lower returns of investment.

How Much Will Users Have to Invest?

The minimum amount of money that a newly registered user will have to deposit is $10,000. Covestor recommends users who intend to subscribe to multiple signal providers to deposit at least $30,000. This basically points out very clearly that Covestor is not a service for casual traders. Covestor has been created for real professionals who are looking for a professional mirror trading service in order to execute large-volume trades.

Covestor Platform and Usability

The trading platform offered by Covestor is very elegant and stylish. It provides all the necessary info needed in order for users to decide which Model Manager to follow. One of the best tools available in the platform is the possibility to filter signal providers according to their risk factor.

The risk factor is a score from 1 to 5 with 1 being the least risky while 5 being the most risky. Riskier signal providers offer the opportunity to earn very large amounts of money but they also pose a higher threat of performing losing trades from time to time.

Regulation

Covestor is an officially licensed and regulated financial advisor by the Securities and Exchange Commission under the Investment Advisers Act of 1940. This means that Covestor follows a series of very strict guidelines regarding the safety of users’ assets, fraud prevention and more.

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