Value for Money Index

The Value for Money Index (VMI) is a continuation of the TPI and measures the relative value a subscriber gets for their monthly investment in an advisory service. In other words, "Where is my subscription dollar best spent?"

The VMI is essentially the ratio between the TPI (which gives us a service's risk-adjusted return) and the monthly subscription fee as a percentage of that return. The fee as a percentage of the monthly return is once again made relative to a bank of $10,000.

First, we calculate the average return achieved by the service by multiplying the $10,000 starting bank by their average percentage return per trade, which is then multiplied by the average number of trades done per month.

This gives us a gross "income" figure for the month. From it, we have to subtract "costs", which are brokerage and subscription fees. To calculate these, we multiply the average number of trades per month by the average brokerage and then add on the monthly service fee.

The services net "income" is then calculated by subtracting the result of Step 2 from the result of Step 1, which gives us 970.40 as shown in Step 3.

Knowing the service's net income allows us to calculate its monthly return as a percentage of the monthly subscription fee it charges. This is done by dividing the fee by the return. 

Once this is done, we can then calculate the ratio between this figure and our risk-adjusted Trade Performance Index by dividing one by the other. This gives the result of 126.95. A score anywhere above 100 would be considered acceptable.