Another Angle on System Developers

A

Aspen

I have been reading the ET board for quite some time now, and wanted to comment on the idea of selling trading systems vs. "just trading larger size" in your own account. Here are a few points that I want to make:

1. The thought that it is easier to "trade larger size" with a profitable system that works sounds good at first, but it still comes down to the emotion involved in placing a larger trade. If a trader has good sense, they don't go from trading 1 lots to 20 lots overnight. A losing trade at $250 that now looks like $5,000 can be a hard thing to handle and the "profitable system" that you are using quickly gets changed due to the fear in losing large amounts of money. Changing the system to suit your risk parameters does just that - it changes the system, which is not what anyone should do - you've got to stick with the original methodology to stay true to the system.

2. Just because one trader thinks that one should "trade bigger size" does not mean that the developer does. If someone told a stock scalper to trade gold credit spreads, does that mean that they should? It's all about personal preference and trading style that makes this industry so unique. ES scalpers can be successful, as too can equity swing traders - it's just a matter of finding what's right for you. Some system traders find that they want to expand their trading business (as entrepreneurs) so offering their ideas to others is a logical step. Don't fault them for it.

3. Since trading is a career just like any other, you need to be satisfied with your accomplishments and feel like you can contribute something. Just trading your own profitable systems is good, but some of us come from the background where we enjoy helping others to succeed. Do you think that a good basketball player who goes into coaching a youth league does it for the money? Why don't they just "play more basketball" and that will be good enough? There is a something to be said about positive feedback and the confirmation of someone saying "thanks, I'm glad that you were able to show me how to improve my trading".

4. True, there are many system vendors that are selling BS systems. There are people like this in any business. But those who have taken the time to develop systems, trade them for themselves and then decide to offer them to others should not be criticized for doing so. I think that the main problem with the posts on ET that deal with this issue is that people think that these "sellers" are only making a few hundred dollars here and there for all the "hassle" that they go through. There is no hassle in dealing with clients if you know how to treat people right and manage your time properly. If you do this the right way, there is a lot more than a few hundred bucks to be made...

As you can see, there is no mention of my company, website or e-mail address, so this is not spam. Just the thoughts of someone in the systems business trying to provide a little insight from those who do it right.
 
I agree with you.

Personally I found I liked the research part of developing systems more than I did the trading part.

I also watched a couple of friends of mine let their egos toss their intellect out the window and as a result submarined their funds (and several years of work) because they mixed up trading and research (and accounting and client managment and compliance and meetings), and trading (and the rest) became the dominant activity, setting the stage for the failure of their technical systems (i.e. no more research).

I took a lesson from that and decided to just develop systems.

Not because I wasn't good at trading, but because I found that when I was responsible for a particular trade, I found that I spent my whole day watching it go up and down instead of concentrating on more important things. And that means family, and exercise and reading books and a whole host of other things -- like trying to think up new systems -- you simply can't do when you're trading actively.

As it is, I get up in the morning, run the systems for subscribers, then go back to bed. I spend a lot of time with my kid and my wife and I personally like life that way.

If I was trading I'd have to get up, run the systems, then spend all day worrying about how the trades were doing, trying to keep my hand off the eject button when they went bad, and riding the highs and lows of my account balance. As a developer, you have the freedom of the entire day in exchange for a few hours of work (if you have TradeStation packages that you sell, this drops to zero).

There was this article in Time a few years ago about DNA computers and how they could do complex calculations in a half an hour that a Cray might take months or years to complete. The problem was, the DNA computers took a half an hour to do EVERY problem. Even something as easy as 2+2. So the DNA computers ended up being impractical for every day use.

I think that as a developer, you need that "half hour" to think up new systems. And if your brain is sitting in front of a computer every day trading, you get a kind of garbage in garbage out problem. You become a great trader, but you start to base all of your systems and methodologies on what you've learned from the markets at close range. It ends up like going hunting with reading glasses on. The big picture (and the long range success of your systems) gets fogged out in favor of the short term. And you miss your prey.

Also, concentrating on the short term you tend to forget there are other things out there which might be useful to you as a developer. Things that are not market related. Take for example the guy who came up with a propeller (story is in a recent issue of Popular Mechanics I saw at the barber's the other day) that is virtually silent and produces very little cavitation. His inspiration? Archimedes screw.

There are lots of things out there for the developer that are tangentially related to the markets which can be useful in system development -- physics, mathematical constructs, psychology, sociology, computer programming, etc. -- and if you're connected to a computer by the umbillical cord of your mouse, it's hard to go out and see (or even think about) these kinds of things. All you see is the markets. So all the DNA computer between your ears can produce is systems related to what you see most of the day.

Personally, my suggestion is pick one. Develop or trade. And get really good at what you are doing. And if people don't like it, well then they don't like it. But I've learned that skeptics are always skeptics. They just never learn and will never believe you no matter what you do.
 
Quote from Aspen:

I
...Some system traders find that they want to expand their trading business (as entrepreneurs) so offering their ideas to others is a logical step. Don't fault them for it.
...
Just trading your own profitable systems is good, but some of us come from the background where we enjoy helping others to succeed.
...
these "sellers" are only making a few hundred dollars here and there for all the "hassle" that they go through. There is no hassle in dealing with clients if you know how to treat people right and manage your time properly. If you do this the right way, there is a lot more than a few hundred bucks to be made...
More...

The business is saturated with systems traders offering their ideas: if they really were valuable they would attract capital and thus a business would be born in trading as oppossed to reselling training materials.

I help others by hiring them. Our ideas are our capital - read intellectual property - and they are not given away. The training that I do nowadays is mostly for free, and is given to people most deserving, not as a marketable business idea. Help people- for free - to make a good living and you really have done something useful.

If you are going to sell some type of system then you had better be offering true value - I have yet to see a published "system" that offers anything but the opportunity to part with your money.
 
Fine,

Post AUDITED trading results (not hypothetical or backtested) of this system you are trading now with the size you are doing.

nitro
Quote from Aspen:

I have been reading the ET board for quite some time now, and wanted to comment on the idea of selling trading systems vs. "just trading larger size" in your own account. Here are a few points that I want to make:

1. The thought that it is easier to "trade larger size" with a profitable system that works sounds good at first, but it still comes down to the emotion involved in placing a larger trade. If a trader has good sense, they don't go from trading 1 lots to 20 lots overnight. A losing trade at $250 that now looks like $5,000 can be a hard thing to handle and the "profitable system" that you are using quickly gets changed due to the fear in losing large amounts of money. Changing the system to suit your risk parameters does just that - it changes the system, which is not what anyone should do - you've got to stick with the original methodology to stay true to the system.

2. Just because one trader thinks that one should "trade bigger size" does not mean that the developer does. If someone told a stock scalper to trade gold credit spreads, does that mean that they should? It's all about personal preference and trading style that makes this industry so unique. ES scalpers can be successful, as too can equity swing traders - it's just a matter of finding what's right for you. Some system traders find that they want to expand their trading business (as entrepreneurs) so offering their ideas to others is a logical step. Don't fault them for it.

3. Since trading is a career just like any other, you need to be satisfied with your accomplishments and feel like you can contribute something. Just trading your own profitable systems is good, but some of us come from the background where we enjoy helping others to succeed. Do you think that a good basketball player who goes into coaching a youth league does it for the money? Why don't they just "play more basketball" and that will be good enough? There is a something to be said about positive feedback and the confirmation of someone saying "thanks, I'm glad that you were able to show me how to improve my trading".

4. True, there are many system vendors that are selling BS systems. There are people like this in any business. But those who have taken the time to develop systems, trade them for themselves and then decide to offer them to others should not be criticized for doing so. I think that the main problem with the posts on ET that deal with this issue is that people think that these "sellers" are only making a few hundred dollars here and there for all the "hassle" that they go through. There is no hassle in dealing with clients if you know how to treat people right and manage your time properly. If you do this the right way, there is a lot more than a few hundred bucks to be made...

As you can see, there is no mention of my company, website or e-mail address, so this is not spam. Just the thoughts of someone in the systems business trying to provide a little insight from those who do it right.
More...
 
You're such a cryptic killjoy, Nitro.

Quote from nitro:

Fine,

Post AUDITED trading results (not hypothetical or backtested) of this system you are trading now with the size you are doing.

nitro
More...
 
Cryptic : marked by an often perplexing brevity

killjoy: one who spoils the pleasure of others (related words: cranky, testy, touchy; cantankerous, irritable, querulous).

Just meant to say that it seemed like a nice thread -- and instead of getting into the spirit of it you want AUDITED performance. I suppose it all comes down to that in the end, doesn't it? Still, cryptic killjoy I dub thee.

panther


Quote from nitro:


I have no idea what that means. Probably just as well.

nitro
More...
 
So be it.

Now, post audited results.

nitro
Quote from pantherproject:

Cryptic : marked by an often perplexing brevity

killjoy: one who spoils the pleasure of others (related words: cranky, testy, touchy; cantankerous, irritable, querulous).

Just meant to say that it seemed like a nice thread -- and instead of getting into the spirit of it you want AUDITED performance. I suppose it all comes down to that in the end, doesn't it? Still, cryptic killjoy I dub thee.

panther
More...
 
I have to agree w/ Nitro on this... how diffucult would it be for a vendor or chatroom to actually trade 1 futures contract or a 100 shares in realtime, and then post the audited results. :confused:
 
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