The trading software market is dead. I have a friend who was trying to raise for a while some money for a project. Not even a dime. You can get 10 Million if you propose a new add-on for facebook or some social network. Nothing for trading. Most platforms provide most of the tools traders need. There is no need for anything else except maybe some AI or data mining. More importantly I think, there are not many traders around. What you see according to the research of my friend are people trading mini-lots and 2K accounts in stocks and futures.
The Trading Software Market is Dead
- Thread starter Gueco72
- Start date
"The trading software market is dead" only for new products that do the same thing as the current products do. If you came with a product that the majority of traders need, you'd have a product that would sell well. As traders are not the same, you need a product that could easily be tailored by each trader to his specific needs. Most traders are not programmers, but most of them need to program and test trading ideas. They need a very user friendly programming tool (like paintbar but easier to use, more powerful, e.g. variables, easier to debug, better documented), the possibility to replay data, relatively large amounts of data, the possibility to esily look at various time frames, to easily annotate, and the possibility to easily place trades, stops, reverse positions.
Baron
ET Founder
Not true. Products like new niche trading software (retail) have about zero chance of becoming a success unless they are marketed to the correct target audience. I literally get contacted every day by someone who's developed the next big thing but I see the same problem happen over and over again..... they have virtually NO MONEY to market their product. Even in cases where a person has spent the last 10 years of his life developing a new groundbreaking algorithmic trading product, all I hear is crickets chirping when I ask him what his marketing budget is. It's as if the last thing that he ever thought about was spending one dime to get his product in front of a qualified audience.
This brings up another major problem that I come across regularly, which is that a trader is either a programmer or he's not. Unfortunately, this creates a massive educational gap between the guys that develop good trading software and those non-programming traders that simply want to use, customize and/or extend that software. So what I'm seeing are new software products developed by math geniuses that take a PhD to understand and operate, with little to no documentation written in language that an average human can understand.
Another issue that I see is pricing. When I ask a potential software advertiser how much his product cost, it's either priced way too low for the size of it's potential market (like $39), or it's way out in the stratosphere like $3,500+ for a short term license and support. When I ask them what the basis for their pricing is, it's almost always based on a false premise.
So let's pretend for a moment that someone with a great software product at a reasonable price comes to me with enough money to market his product for the next six months. As soon as the word about his product gets out and people start checking it out, GOD FORBID that there is one bit of negative feedback. It's like the software creator's ego was manufactured out of that fake shatter glass they use in the movies, and it just got hit with a claw hammer. So I have to teach him how to have a thick skin and deal with constructive criticism without crawling in a hole with a box of tissues.
So in summary, what it all boils down to is this: Programmers of trading software are horrible at business on every level. Although they may have the skills required to create an outstanding or revolutionary product, they have virtually none of the business skills required to make that product a commercial success.
False. I know of two large seed rounds in my city for trading software.
I can guess right away reasons why your friend cannot get funding, and it has nothing to do with the product or the market, but rather his pitch argument:
Firstly, the above description does not give me any background sense of your evidence or quantitative grasp of the market. What really is the size and growth rate for his segment?
Your friend could have put something like this in his favor. The argument that he should present to a VC/angel in this case is not that hardly anyone is trading, but rather you think that this is an untapped market that has been overlooked and is going to grow exponentially due to some drivers that no one else has previously thought about. He should talk about the future as much as the present.
Also, what is his business model? What will be his burn rate? What will be some key milestones in his financial growth; revenue drivers and key customers? What is his sales strategy?
Very importantly too, what law firm and accounting firm has he engaged or will he use for corporate issues and patents? Does he have any patents? What are the possible exit scenarios, with existing comparables and reasoning for these? What security is he offering and how much is he asking for the security that he is selling?
My group has been willing to fund trading software development as an angel, and I certainly know of large VCs in the area who are interested.
There is a $1bn a month going into IB accounts. Look at the monthly brokerage metrics spreadsheet https://investors.interactivebrokers.com/ir/main.php
The reason most if not all fail is that it simply doesn't work. The public has finally caught on that anything sold to them doesn't have any value. I disagree with Baron regarding marketing dollars. In my opinion, the public has become wiser and no longer falls for the same old crap. Now, something truly revolutionary would sell with proper marketing-- but something truly revolutionary WOULD NOT BE OFFERED TO THE PUBLIC-=-- untill it stopped working. So its a catch 22 situation----
surf
surf
This is why most people are skeptical. Why waste time selling a system to make money, when you have the money-making machine in front of you?
I see trading software with great colors and nice sounds, but it look so much like a gimmick I laugh. Then I see some that is so confusing, I assume it's only for people with 100 million trying to lower latency.
All I really want is software that can read market profile, etc.. and give me a signal when a parameter of mine is reached. but I can do that on my own, even if not perfect.
I had a friend that created a trading system and with 5,000 stocks, of course it will be perfect on a small number of those 5,000. so, for marketing purposes, find that number and sell the system based on the fact the trader would know which stocks to use the system on. lol.