The value of a strategy isn't only in "how much it earns", but in how the capital is utilized. The same strategy can multiply its profits not by changing the performance, but by changing the business model. With external capital and the right profit split, the trader's return is multiplied.
Personally, having developed a strategy with 15+ years of data and 2 years LIVE, with almost perfect convergence between backtest and real trades, I discovered that the most powerful asset isn't only the system, but the way it's positioned in the market through the right capital structures.
How do you really leverage a profitable strategy?
The same strategy can yield a completely different profit, depending on the partnership model and the type of capital.
Let's assume my initial capital is €5,000.
Trading with my own money (Broker)
Capital: €5,000 – Return: 80%/year – Net profit: €4,000 – Performance fee: 100% to me
Trader profit: €4,000/year
Darwinex (managing investor capital)
Cost: €5,000 – Capital under management: €500,000 – Return: 15%/year – Net profit: €75,000 – Performance fee: 15%
Trader profit: €11,250/year
Prop Firms (company capital with profit split)
Challenge cost: €5,000 – Capital under management: €500,000 – Return: 6%/year – Net profit: €30,000 – Performance fee: 80% to trader
Trader profit: €24,000/year