Would you lease an automated trading system
- Thread starter dom993
- Start date
This is pretty simple ... each subscriber receives a compiled-version of the strategy, allowed to run only with his/her Ninja instance, until the expiration date for the lease.
Ninja/Help/About ... 3rd line: MachineID is specific to each Ninja instance (even if you install the same Ninja licence on 2 PCs, you'll get 2 distinct MachineID).
If there is profit to be made, of course I would lease it. But that all depends on what type of strategy is used, the liquidity it can handle, and of course profitability. The client would probably want to see some records to make sure everything works. Backtest is usually not preferred because any joker can produce profitability on fitted data, and I would also be weary of how the system handles the mechanics of trading...if there is fast data or sudden spikes, how does the system handle it...and what failsafes are put into place. Like the Knight Capital fiasco, the last thing we need is to have execution errors or order problems (loops)...and sudden drain the whole account because of some code bugs.
I would not be interested in any third party sites like C2. Why would I give another middle man some cut of the profit that provide no services that is necessary to make money?
I would not be interested in any third party sites like C2. Why would I give another middle man some cut of the profit that provide no services that is necessary to make money?
As someone who leased, and bought when they got started in this buisness, I would say NO. I went through quite a few of the supposedly profitable systems. At least 2 a broker was able to show me actual fills. Well, gee whiz when I started trading the systems failed miserably over the course of a year. Most systems are way to optimized for a particular time period. They have no hope over the long term. I know yours is different, but so were all of them.
My gut tells me there might be a market for leased strategies aimed at the retail FX crowd. FXCM now connects to NT, and I think their client base might like this sort of thing ...
... but my gut also tells me that dealing with retail offers few economies of scale; a) there's lots of competition for what you'd be offering, and so inevitably I suspect you'd get fewer takers than you'd hope for, and b) the more customers you get the more "customer management" of one sort of another you have to get involved in, even if you're leasing through a third party like FXCM or C2 ... and these are low value, unsavvy customers ... you would probably have to waste a lot of time dealing with folks ...
So ...
... if you have something decent, why not aim higher and get a smaller number of investors to load you up with more capital. Then you just have to concentrate on dealing with a smaller number of more savvy folk; I suspect you'd also have more time to work on bigger and better strategies; the customer feedback you get would probably be more valuable, insightful and helpful; and you have a better shot at better ultimate returns ...?
Re. failsafes ... I am interested into what would you like to see to feel safe? Most brokerage firms can set a max daily loss on an account, what else would you like a system to provide in this area?
C2 ... yes, I just discovered that they also charge subscribers about $2 per entry or exit signal, and they add a lot of reliability issues vs a standalone system.
