Buying a Trading System/Indicators

[Xela]

He pay a lot of money for it.

A few hundred, or a few thousand?

1. I never really understood this logical, hopefully you can help. If someone has a trading system that works for them, why would they sell it to the world? If it so good and has good ROI, I don’t understand why anyone would sell it?

This is the key question, and the difficulty in answering this question convincingly is usually the strongest clue to the reality that this is unlikely to be an appropriate choice.

2. What the chances of the trading system eventually becoming not useable and doesn’t make money anymore.

If it has a proven edge right now, you mean? (Big assumption, there).

They're somewhere in-between "high" and "very high", probably.

But that still doesn't necessarily make it worthless, if it's working well now.

3. What questions would you ask if thinking of buying such a product?

I would ask the following ... (note that interpreting the answers to all three of these questions requires quite a bit of experience, good judgement and some real statistical understanding, which probably few potential buyers will realistically have) ...

(i) What objective, independently verified evidence is there that it has a proven edge?

(ii) Can I speak, myself, with another buyer or two (or more) who have been using the system for some months (not "anonymous testimonials" or "incentivised testimonials")?

(iii) Does it appear to be based on common-sense principles and to have some kind of collective, predictive value rather than simply being back-fitted/curve-fitted to the data which purports to verify its edge?

Without really satisfactory answers to all three of these questions, I wouldn't touch it.

More specifically, if the vendor tries to claim or imply that the second of those questions is "unreasonably demanding", from a potential buyer, I would lose interest rapidly.

In short, it's not impossible, but realities predicate that the odds are heavily stacked against this being a good idea, and the initial presumption (albeit open to correction) should certainly be that it isn't.

 

[SimpleMeLike]

The system sells for $2k with a 4 day free trial. I reviewed the system for about 5 days and it really makes it easy, but you dont learn anything like i do withbmy system which is price action based. Seems simple, But like I said, if it works soo good, who would sell it?

And if I buy, i want really be learning.

 

[Xela]

The system sells for $2k with a 4 day free trial.

That combination significantly strengthens my skeptical reaction to this proposition. Anyway, the three things I'd need to know, to take it seriously, are set out above.

 

[SimpleMeLike]

That combination significantly strengthens my skeptical reaction to this proposition. Anyway, the three things I'd need to know, to take it seriously, are set out above.

Thanks for your effort and time in replying.

Why does that make you so skeptical? Cause its cheap?

 

[bln]

Only a fool would sell a working system and only a fool would buy one.

1. Create system that show exellent result then curve fitted to a time period, like 2012-2015, but will not work going forward.
2. Sell it to retail fools
3. Profit!
4. Repeat

There sure is money in that business, lol..

 

[SimpleMeLike]

Only a fool would sell a working system and only a fool would buy one.

1. Create system that show exellent result then curve fitted to a time period, like 2012-2015, but will not work going forward.
2. Sell it to retail fools
3. Profit!
4. Repeat

There sure is money in that business, lol..

Thanks for input. That does make sense. The trading system is for futures day trading.

Since I did the free trial, everyday I get videos showing how a trade today made money.

 

[Xela]

Why does that make you so skeptical? Cause its cheap?

Noooooo (I don't think it is); the free trial is really short.

And it's wise to be skeptical, in principle, of this "industry".

A Martingale-based system (I'm not suggesting this is one, obviously) will perform really well for a huge proportion of its users on a very brief free trial, but is still suicidal to use.

everyday I get videos showing how a trade today made money.

On a day with 5 losers and 2 winners, which trade(s) are they going to circulate for marketing purposes?

Anyway, it's pretty simple: the three things you need to know are listed, up above ...

 

[JoeAnonymous]

Well let's make some assumptions:
1. There is a superior system called system X with high annual results low drawdowns, good sharpe ratio and presumably future resistant
2. The owner of the system has no capital and no means to get capital
3. The owner wants to sell it because they have no other practical means to cash in on it

Assuming #1 #2 and #3 were true then what would this be worth to a buyer? Of course it would be valuable.

Having said all that I would never buy a system unless maybe from a friend or family. I don't have many friends (handful).

Or maybe if I was in a business with someone and I saw them making money every day with their system and I knew for a 100% fact that they were using that system and were doing me a favor to sell it to me and I had to talk them into it.

I have thought about the same. What if I had a great system? I don't have enough capital to cash in quick. What if I could sell it for a million USD. Of course I would. Money in the bank is better than money in the sky if you don't have a lot. But people with more money in the bank probably want a chance at more money in the sky to potentially go to their bank.

Then I would quit my job go live comfortably somewhere and invest my own system using part of the million USD.

Anyway the conclusion is.. it all depends.

 

[userque]

I have a successful system on C2. Up about 200% (3x) since the end of Jan. 2016. I've improved it since then as well.

One can sell a successful system just as mutual funds and hedge funds etc. sell their systems. It doesn't make one a fool to do so. Complex system can't be decoded, and systems that trade liquid instruments are resistant to the impact of many others following the system.

One can buy signals etc. for the same reasons people buy into other funds. It doesn't make them a fool to do so.

And btw, it is easy to get suck into selling your signals when you have a successful system. It starts by helping friends/family/co-workers etc. While no one really wants to 'deal with the public,' it's not so bad if you're making them money.

 

[Handle123]

I have a successful system on C2. Up about 200% (3x) since the end of Jan. 2016. I've improved it since then as well.

One can sell a successful system just as mutual funds and hedge funds etc. sell their systems. It doesn't make one a fool to do so. Complex system can't be decoded, and systems that trade liquid instruments are resistant to the impact of many others following the system.

One can buy signals etc. for the same reasons people buy into other funds. It doesn't make them a fool to do so.

And btw, it is easy to get suck into selling your signals when you have a successful system. It starts by helping friends/family/co-workers etc. While no one really wants to 'deal with the public,' it's not so bad if you're making them money.

Complex systems CAN be decoded eventually, some of us been playing the game long time.
I look at it this way, if I took in money from those I know, I am now having to compete with them for my orders to be filled for a lousy 20-30% return? Instead I can toss on more lots and keep 100%, I did not give up parts of life to give gifts to relatives every week, they can spend the years to get decent at this and do it themselves. They will be calling you bad names when your back is turned or just not smile at you as much if you lose a nickel, no I learned long ago, don't let them lease houses from me nor trade money for them. Why add stress to my life. And when they ask how things are going, response is always with that disgusted facial look and say "Things could be better".