Truely Automated trading platform

Got a question, I'm relatively new to professional trading:

Why don't the biggest brokers (such as E-Trade, Ameritrade, Schwab, etc.) offer more sophisticated order entry/exit options such as the kind the original poster mentions? Since these firms are so large, and since professional traders account for most of the day's trading volume, shouldn't they offer more advanced options for them?
 
Quote from -EntropyTrader:

Got a question, I'm relatively new to professional trading:

Why don't the biggest brokers (such as E-Trade, Ameritrade, Schwab, etc.) offer more sophisticated order entry/exit options such as the kind the original poster mentions? Since these firms are so large, and since professional traders account for most of the day's trading volume, shouldn't they offer more advanced options for them?
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I think the answer is liability. Unfortunately, we live in a ridiculously litigation filled society. The typical client for E*Trade, Ameritrade and Schwab are the non-sophisticated small investor. As a whole, these clients are not suited for powerful trading automation tools. As a result, if offered these tools, they would find a way to lose all of their account in record time, through automation.

With automation, you can literally lose an entire 100k account in one day or less. The question becomes, whose 'fault' is it, once this loss occurs? Is it the fault of the non-sophisticated small investor that signed all of the risk disclosure documents and programmed the system that lost the money? Or is it the fault of the deep pocketed institution that allowed him to be responsible and gave him the tools to do something stupid? Our trial lawyers will want to find out, no doubt! Just ask McDonalds, who is being sued for serving Quarter Pounders, that when eaten ten times per day will make you obese (who would've thought it?).

Anyway, I created a powerful daytrading automation platform five years ago and decided NOT to make it commercially available for this very reason. I am doing just fine, without the potential legal hassles, by managing private money using this tool exclusively myself.

-Eric
 
Honestly, an average Joe system trader should learn to program anyways... based on the fact that they're going to trade a computerized system. They should understand the risk of automating a system with programming flaws and have some sort of software engineering background...

Also, helps you expand your trading system's horizon...
 
Joetrader:
Your comments re Tradefactory interest me. I gather from the text that in addition to having the account size, you need to have a concept that will trade profitably with high frequency. That means stat arb, institutional programs trading fair value, and/or a number of other approaches that retail traders usually don't have the training or experience to implement. Do you come from a finance background yourself, or did you hire outside help to work for you. Regards, steve46
 
For futures trading I've heard that "StrategyRunner" seems to be very good I understand it may have an API to tie into J-Trader (although this may rely on your B/D relationship with Pats Systems)

rttrader -
 
Quote from Joetrader:



First of all, you pretty much have to be running institutional size money to use any of these products. They all work through prime broker relationships, so you must have a prime brokerage account. The legal minimum (Federal Law) is 500K for a Prime brokerage account, but most Prime's want 2M to 5M minimum. Also, you will be required to instal dual redundant T-1 connections for most products. If you meet those requirements there are lots of options for you.
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joe,

i apprieciate you sharing the knowledge---very good stuff ! however, the small fund i work with opened a prime account with 300k thru ING BARRINGS 2 year ago. none of my contacts, consultants or ING itself advised of the 500k federal minimum. where can i verify this information ??

thanks,

surfer
 
Surfer,

I should have been more specific. 500k for everyone EXCEPT for a registered investment advisor (RIA). The Federal minimum for RIA's is 100k. This is per the "no-action letter" issued by the SEC on October 6, 1994.

Most hedge funds are not RIA's for legal reasons. One good source for this and other information concerning Hedge Funds is;

Title = Hedge Funds
Publisher = Irwin
Author = Jess Lederman and Robert A. Klein



Steve,

My background is pretty much trading and I wish I had help! lol
I have a graduate degree in Applied Math and I'm a good programmer to boot, so that couldn't hurt any.
 
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