MetaQuotes decided to follow the Apple iTunes model for the forex market through its MQL5 market. The company, which is the developer and owner of MetaTrader, has taken the numerous ideas of independent web sites and attempted to put them all under its umbrella.
A lot of traders have been screaming about this, especially in the past few weeks. MT4i is a popular web site that built unauthorized plugins that modified the behavior of MT4. The plugins were wildly popular. Unfortunately, they also violated the software usage agreement that forbids modifying the software.
If you want to work with MetaTrader in a commercial environment, then you are forced to play by the rules that they set. With that in mind, I wanted to write some of the pros and cons of why you might consider using the MQL5 Market.
Advantages to using the MQL5 Market
I read Nassim Taleb’s Antifragile a few weeks ago. A predominant theme that he loves to hit on is finding opportunities that have little downside and infinite payoffs. Selling an expert Advisors very much fits into this category.
The cost to develop one ranges from $360-540 for a normal EA. The payoff for most of my customers is the excitement of finding out the performance of their idea. After spending the development costs, the downside is 100% capped.
The thing I like about MQL5 market is that you can take advantage of a free option: a business in a box. The trader only needs to supply an EA and to trade it. MetaQuotes literally does everything for you. They market products, track the performance, do the customer service, collect the money and write the check. Not bad.
What I also like is that MetaQuotes handles the encryption and licensing of the product. Hundreds of customers casually inquired about the possibility of selling their expert advisor over the past 5 ½ years. Very few of them decide to go forward.
The reason is that it takes tons of times (i.e., it’s expensive) to develop the security protocols and encryption to control access to the file. Integrating with a payment processor like PayPal makes it even more expensive.
Most people ask about selling EAs on a whim. It’s not worth spending several thousand dollars on.
MetaQuotes’ system eliminates the hurdle. Potentially selling your expert advisor is as simple as registering the product on their site and filling out a form.
Are your odds of success very good? No.
But you’ll at least have the opportunity to succeed and don’t have to do anything beyond filling out forms for 5 minutes. The better question is, “why not to do it?”
EU based traders might seriously consider using MetaQuotes simply because of the absurd VAT rates in most of Europe. MetaQuotes charges a 20% commission for selling trading products.
VAT in most of the EU countries that I know of are already higher than 20%. Starting in 2015, EU businesses will be required to collect and track VAT payments for each country where the end customer resides.
Tracking all of those details is insanely complex and time consuming. It’s cheaper to pay MetaQuotes the 20% commission. Doing so also avoids the hassle of reporting and collecting different VAT across the whole EU.
The disadvantages only affect people with experience running online businesses. I own a successful online business. The challenge of marketing a product online doesn’t intimidate me the way it does to someone who has never done online marketing.
My sales come from the relationships with people. I build those connections online through the web site and the company Facebook and Twitter accounts. When a customer makes a purchasing decision, it’s because they know and trust me as a person.
I see that relationship as the absolute, most critical element in running any kind of business. So, what happens if I lose control over that relationship and hand it off to MetaQuotes?
The business owner blends in with the crowd. MetaTrader 5 isn’t even that popular, but there are already 250 different expert advisors for sale. There’s slim hope of a product standing out from the crowd if setting up a page on MQL5.com is the only marketing strategy.
The majority MQL5.com visitors come from countries where Western prices seem exorbitant. Yes, a handful of those visitors can afford the $1,000+ price tag that most good strategies charge. As a percentage, though, it’s tiny.
Alexa, the traffic ranking site, is only good for rough approximations. Click the audience tab and scroll the visitors by country section. Alexa says that the US and Australia only form 10% of the MQL5 site’s total traffic. Not good.
Russia makes up the biggest traffic source with 18% of the traffic. Unless you’re thinking of a Muscovite billionaire oligarch, it’s not a country that you associate with disposable income. Most of the other countries in the list have similar profiles.
Vendors on the site more than likely come from similar countries. I can’t help but think of my friend Ardi, who comes from a city in Indonesia where a couple hundred bucks of month is a good income. He’d be willing to sell a quality expert advisor for $99. That’s a lot of money to him.
There are many Ardis out there for every Aussie or Brit that wants to sell his quality product for 900 quid. The price points look ridiculous when you are 5x more expensive than the average seller.
The 20% commission and loss of control over payments doesn’t seem appealing, either. If the strategy is to put up a page and get sales that you otherwise would not have gotten, then fair play.
Any sane business owner is happy to pay a commission on sales he couldn’t do on his own.
That said, using MQL5 as the exclusive marketing strategy doesn’t seem like a good idea, either. I flipped through a couple of the EAs for sale. Not one page contained a link to a sales page with more information. You can put up your one page description, and then that pretty much has to be enough to get someone to pull the trigger.
One of the guys in my bible study owns an online marketing company. We were chatting about web sites the other day and how important social media is to driving traffic.
He mentioned how so many customers approach him the goal of selling their products online. The first question that he asks a new customer is, “what is your marketing strategy?”
When they usually respond, “Um, I don’t have one,” he likes to joke that it’s a Field of Dreams web site. If you build it, they will come.
Anyone with online marketing experience gets the joke. Nobody shows up at your web site, and they certainly don’t buy products, just because you have a page. It takes time and effort to build a relationship with the customer.
I don’t see that happening on the MQL5 market, either now or in the future. MetaQuotes is a large company, so I’m sure that somebody will buy something. It probably won’t be your product.
I wouldn’t put more time into the site beyond the 5 minutes that it takes to fill out the forms. It is, after all, a free option.