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Would you lease an automated trading system


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Would you lease an automated trading system

  #1 (permalink)
dom993
OTTAWA ON/CANADA
 
Posts: 11 since May 2012
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Hi there,

I am a retail trader, specialized in designing & trading my own automated trading systems (currently focused on CL, intraday).

I have reached a point where I have traded profitably my primary system for the last 8 months, at minimum position size & reduced setup-scope, and I am trading it in 2013 to the max of my trading account.

In parallel, I am evaluating a couple of options to monetize this trading system while I trade it live - one of these options being to offer the Ninja strategy for lease.

I have the following questions for you:

1. "Would you ever lease an automated trading system"?
2. "If yes, what would be the key aspects you would base your due-diligence & final decision on"?
3. "Would you rather lease a system running on NinjaTrader, or would a signal-service off Collective2 be a better alternative for you"?

I voluntarily didn't provide any information re. this system. If, from your answers, I decide on pursuing this idea, I will do so through whatever appropriate means for this forum.

Thanks in advance for your responses

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  #3 (permalink)
 
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 sam028 
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1. their are already hundreds of snake oil vendors, selling a "fair" system might means less profit for this guys, so yes, it might be a good idea.
2. if you're system is profitable enough, I'm not sure you'll have to rent it. That will also put more pressure on you if things goes wrong for your "customers". On the other side, it could be nice to not being alone to try the same idea.
3. C2 is not good for intraday signals, too slow, and not reliable. You may sell the strategy directly, or if you're paranoid and good enough in C# create your own signal service yourself (a "server" strategy running on your machine will send signals to your customers "client" strategy, which won't have to be very smart, and which won't have any part of the main logic).

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  #4 (permalink)
 
mattz's Avatar
 mattz   is a Vendor
 
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dom993 View Post
Hi there,

I am a retail trader, specialized in designing & trading my own automated trading systems (currently focused on CL, intraday).

I have reached a point where I have traded profitably my primary system for the last 8 months, at minimum position size & reduced setup-scope, and I am trading it in 2013 to the max of my trading account.

In parallel, I am evaluating a couple of options to monetize this trading system while I trade it live - one of these options being to offer the Ninja strategy for lease.

I have the following questions for you:

1. "Would you ever lease an automated trading system"?
2. "If yes, what would be the key aspects you would base your due-diligence & final decision on"?
3. "Would you rather lease a system running on NinjaTrader, or would a signal-service off Collective2 be a better alternative for you"?

I voluntarily didn't provide any information re. this system. If, from your answers, I decide on pursuing this idea, I will do so through whatever appropriate means for this forum.

Thanks in advance for your responses

We are always interested (as brokers) in finding good systems for our customers. I would have to say that yes there are many simply out right "dysfunctional" systems out there, however I also find that the retail customers at times also have unrealistic expectations as far as return and the inability to go through drawdowns (which could be very lengthy).

Your approach in selling your system has to be balanced and preparing the customer to the potential drawdown.
As an example, many vendors see a draw down of 9K on their systems and ask to open an account with 10K.
This is unbalanced and no one can stomach such drawdowns.

The fact you have traded your systems is VERY encouraging, so I would encourage you to explore ways to lease the systems for a monthly fair price if you believe its logic could be traded long term. Also, in fairness to customers, you should be able to change (only if necessary) the parameters if you think the system needs tweaking.

BTW, asking for opinions on any trading forum about systems will get you these replies:
1) "I paper traded my systems and I can get 300% a month!"
2) "if it's so good why sell it?" (those who trash vendors and systems here get many many thanks!)

As Sam mentioned and I share the same sentiment: going via a 3rd party can be costly in terms of execution.
We sign NDA (non disclosure agreements) and trade the systems in house for customers to avoid latency in execution.

What I don't like about certain vendors:
1) Lack of regulatory disclaimer (out right hype)
2) Leasing the system directly to customers (lack of responsibility in terms of the lots traded, especially CL)

As I write this, we are trying to build a reporting mechanism that will report real performance and not just the hypothetical that seem to rule the system world.

Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #5 (permalink)
lili
Indianapolis, IN
 
Posts: 38 since Nov 2012
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interesting idea - but no thanks.

I am extremely sceptical, very risk adverse, and I have a hard time believing that anybody would be as interested as I am myself in generating a profit for me.

I am a retail trader myself, and I developed my own (simple, manual, but highly effective) strategy tailored to fit all my own needs, specifically for the platform that I work with.

I would never consider "renting out" that strategy to anybody, for several reasons:
1, friendship ends where money is involved
2, I don't want to feel responsible for other peoples' losses
3, I don't have a license as a financial advisor
4, if my strategy is as good as I think it is, it will only create greed and envy with my "customers"

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  #6 (permalink)
 
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lili View Post
interesting idea - but no thanks.

I am extremely sceptical, very risk adverse, and I have a hard time believing that anybody would be as interested as I am myself in generating a profit for me.

I am a retail trader myself, and I developed my own (simple, manual, but highly effective) strategy tailored to fit all my own needs, specifically for the platform that I work with.

I would never consider "renting out" that strategy to anybody, for several reasons:
1, friendship ends where money is involved
2, I don't want to feel responsible for other peoples' losses
3, I don't have a license as a financial advisor
4, if my strategy is as good as I think it is, it will only create greed and envy with my "customers"

People who utilize 3rd party vendors are not looking for "friends", they look for people who hopefully trade their own method and willing to share it on a fee basis. Some profitable traders continue to a healthy CTA (commodity trading advisor) career where they participate in sharing profits as well.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
1 800 771 6748 local 561 367 8686 email [email protected]
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  #7 (permalink)
lili
Indianapolis, IN
 
Posts: 38 since Nov 2012
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mattz View Post
People who utilize 3rd party vendors are not looking for "friends", they look for people who hopefully trade their own method and willing to share it on a fee basis. Some profitable traders continue to a healthy CTA (commodity trading advisor) career where they participate in sharing profits as well.

I realize that, but that wasn't the question

the question was whether I would lease an automated trading system.

I simply explained my reasons why I wouldn't.
The use of the word "friendship" was meant in a metaphorical sense - meaning a lot of negative feelings (like greed, envy, distrust) may be involved when money is part of the deal.
I also really enjoy my profession (I'm a programmer) and have absolutely no intentions to become anybody's financial advisor - even if I was totally confident in my trading method.
Also, since I am totally confident in my trading method, I don't believe I would benefit from an automated trading system. Why would I let some "robot" play a highly entertaining and rewarding "brain-game" on my behalf?

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  #8 (permalink)
 
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lili View Post
I realize that, but that wasn't the question

the question was whether I would lease an automated trading system.

I simply explained my reasons why I wouldn't.
The use of the word "friendship" was meant in a metaphorical sense - meaning a lot of negative feelings (like greed, envy, distrust) may be involved when money is part of the deal.
I also really enjoy my profession (I'm a programmer) and have absolutely no intentions to become anybody's financial advisor - even if I was totally confident in my trading method.
Also, since I am totally confident in my trading method, I don't believe I would benefit from an automated trading system. Why would I let some "robot" play a highly entertaining and rewarding "brain-game" on my behalf?

Respected.

Having said all that, the lease of a system is nothing but you sharing methodology with others. This does not constitute a financial advisor in the traditional sense of the word.

I do agree that leasing your system to other may be a very emotional experience for for the lessor and lessee.
But, as I have mentioned before in many posts systems trading is not emotions free.

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
1 800 771 6748 local 561 367 8686 email [email protected]
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  #9 (permalink)
dom993
OTTAWA ON/CANADA
 
Posts: 11 since May 2012
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artemiso View Post
@dom993

If you are planning to lease out your trading system to recover development costs, I have one suggestion:

Regardless of what your strategy signals involve, add a random number generator to your trading signals, which generates a 50-50 chance of going either short or long at every signal. This way, half of your customers' systems will make correct predictions at every turn. Over time, there will be a portion of your customers who will have remained profitable over a long period of time through your system, and continue leasing your system.

You will retain more customers and earn more money as a vendor this way.


This is really a stupid post. If I had any power on this site, I would have you banned. Get lost.

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  #10 (permalink)
 artemiso 
New York, NY
 
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dom993 View Post
This is really a stupid post. If I had any power on this site, I would have you banned. Get lost.

Wow, that must have been the first time that I've received such a callous remark.

I admit that was a tongue-in-cheek post to catch your attention. You asked for a means to monetize the trading system, and we've given a variety of thought-out ideas and the least you could do is to acknowledge it. I think a minimum level of politeness expects that you talk to those who try to help you. (At least I got a "get lost". Thanks.)

But I prefer not to escalate it, and apologize if there's any reason why it would offend you.

Good luck.

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