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Dear RealTraders;
I agree with most of what has been said on the systemes sellers: most of the
systemes for sales don't have very much interest.
However, there are different ways to "sell" systems. I am a CTA and I "sell"
my system in the sens that I will take 20% of the profits of my customers. As
for the reason to sell a system there may be several. A sytem may give an
average of 40% BUT have possible drawdown of 30% and flat periods of one
year. It would be risky to start trading your own money with this system if
you don't have a solid capital basis to be able to afford the maximum dradown
if you are unlucky enough to start with the maximum drawdown (and we all know
that the worst case happens more often than the statistics may let think)...
and to live while trying to recover. Unless you love to live on pasta that
means at least a $300,000 starting capital.
But even if you have that capital, if your systeme is successfull it may be
more cleaver to "sell" it. One year ago I was invited to a party given by
somebody who had been a math teacher and had developed a quantitative trading
system for derivatioves. He worked for AIG and it's last yearly compensation
from AIG was over $250 M. As a matter of fact he was making much more than
the AIG's CEO and got fired... with another quarter billion dollar package.
Of course he would never have been able to make this kind of money if he had
been trading his own money.
This guy make a littel bit disagree with the opinion that trading systems are
only valid for a short period of time. He did it during many years. I ignore
if he was improving his systems (I guess he was because he had a staff for
R&D but that's not the poiont. Of course what a man has done an another can
do it. But the nuber of people intervening on the markets and trading systems
will always be relatively small. Even if all the intervenants know of a
successfull system that does not mean that tthey will trade it. For instance
most of the intervenants on the stock markets are investors, institutionals
or not, and will never trade. On other markets people are hedging or have
some completely differents reasons to be part of the markets, like the
central banks that intervene.
That's why I guess it may be worth to alway keep an open mind.
Jean Jacques
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