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The Trading Software Market is Dead
- Thread starter Gueco72
- Start date
+1000
IMHO that is not correct. What real traders need in the current market environment is a platform/software that provides a total solution:Quote from Gueco72:
... Most platforms provide most of the tools traders need...
1. A FIX connection to my Broker(s) of choice. Supports most/all of the current ECNs.
2. A low latency data feed with lots of historical data i.e. sub-second Tick data.
3. The ability to test and trade real-time strategies across large portfolios.
4. Strategies are developed in a .Net compatible language.
5. Provides and supports order handling logic for complicated orders i.e. can execute baskets and spreads between stocks, ETFs and futures. This is absolutely critical!
6. Charges a very small fee per share i.e. anything more than 0.001 per share for stocks is cost prohibitive.
With the above platform I could trade tens of millions of shares a month in stocks and thousands of futures contracts. I could compete successfully and very profitably on a more level playing field. Unfortunately, I'm not willing to pay for the development of such a platform because it would be cost prohibitive to support and maintain as an individual trade.
If you're dinking around trying to guess which stock is going to breakout or buying and holding stocks in your IRA then I agree that the currently available trading software meets and exceeds the needs of most people (note that I didn't say traders!).
Quote from marketsurfer:
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.
surf
Yeah, and muscle gainer, diet pills, other supplements, Jenny Craig/Weight Watchers no longer appeal to the public...
Problem is that the market is too small and the product/service doesn't hit the sweet spot - it doesn't solve an overwhelming problem brought about by irrational need.
The irrational need is there - the desire to get rich w/ a little black box with little to no work. But, as we know, that particular product is not for sale.
Quote from loopquantumgirl:
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.
You are clearly talking about institutional -- large speculator type products. This thread is directed toward retail. surf
Quote from Baron:
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.
This is very true...
Say what you will about Kiyosaki and his books/programs, he hit the nail on the head with Cashflow Quandrant.
Programmers and other "technicians" fall in the lower left quadrant - the sole proprietors/craftmen. They are neither employees, nor businesspersons, nor investors.
Most technicians believe if they build it, the world will magically know they and their product exists, and beat a path to their door. The reality is, as soon as you flip the open sign, you need to spend 95% of their time, money, and energy on sales and marketing. Because at this point, the product/service doesn't matter. The public assumes your product/service is ready and does what you say it does. Otherwise, why would you open for business?
The SBA and others say that 80% of new businesses fail in the first year, usually due to undercapitalization. I disagree. They don't fail due to undercapitalization. They fail because they have no revenue. And they have no revenue because they didn't budget for sales or marketing.
Having been a sys admin, I experienced first-hand the cluelessness of technical people. As with other departments, everyone on the overhead side of the business seems to think their indispensable, that the business will collapse w/o a fully-staffed/fully-funded IT dept, HR, Finance, Maintenance, Engineering, etc. And they all complain about the sales/marketing guys, about how clueless they are, etc.
The reality is, the sales/marketing guys are the ones bringing in the revenue. W/o them, the whole enterprise collapses. If no money is coming in, it doesn't matter what's in the product/service pipeline. It doesn't matter about the projects and other work that needs to be completed.
Good sales/marketing people are worth their weight in gold.
It's only when you become an owner do you realize it's all about bringing in the Benjamin's. Everything else just sucks the money out of the business.
I think you may be partially right, but all industries suffer the problem of non-business people being inept at launching their product.
I think the reason is the most obvious that has been mentioned: lack of demand and clarity on who is the target user. I've had this thought for a while but it was basically confirmed when I read this business insider "article" last Friday, http://www.businessinsider.com/pictures-of-the-best-trading-desks-2013-7 .
I've never seen an article become passed off as a market research survey. Someone paid Business Insider to conduct a poll on who the hell still buys trading software and what exactly they trade/do with it.
Will trading come back? I think it's possible in Forex. That is where I would market trading software. I'm not sure how competitive it already is but with interest rates rising that will bring back the carry trade which will likely increase FX volatility and trends of currencies.
I think the reason is the most obvious that has been mentioned: lack of demand and clarity on who is the target user. I've had this thought for a while but it was basically confirmed when I read this business insider "article" last Friday, http://www.businessinsider.com/pictures-of-the-best-trading-desks-2013-7 .
I've never seen an article become passed off as a market research survey. Someone paid Business Insider to conduct a poll on who the hell still buys trading software and what exactly they trade/do with it.
Will trading come back? I think it's possible in Forex. That is where I would market trading software. I'm not sure how competitive it already is but with interest rates rising that will bring back the carry trade which will likely increase FX volatility and trends of currencies.
You can't get anything done without buy-in from the large brokerage houses.
In the institutional space: electronic swaps trading, dark pools for options, and other technologies only took off when the banks (collectively) owned most of the technology.
In retail, I think similar applies. Rather than selling your technology to the individual. Sell it to E-trade so that they can integrate it with their offering.
In the institutional space: electronic swaps trading, dark pools for options, and other technologies only took off when the banks (collectively) owned most of the technology.
In retail, I think similar applies. Rather than selling your technology to the individual. Sell it to E-trade so that they can integrate it with their offering.