Got System Cocked, Where Do I Shoot?

Discussion in 'Strategy Building' started by btowntrader54, Aug 15, 2008.

  1. The amount of capital utilizing this system will be capped based on my determination of scalability. It could be one person or it could be ten or a desk. This will be to do my best to ensure the trade doesn't get crowded. I highly doubt it would anyway but to be on the safe side that's how it's going to be for the time being.
     
    #21     Aug 28, 2008
  2. eagle

    eagle

    The fear of your potential partner is that how he can trust your system and you personally. Firstly, he risks losing his capital if it is not working and secondly he risks to be kicked out when reaching a certain level of profitability, the time when you get enough money to fly on your own. So the reward he could get is not worth his capital exposure to risk.

     
    #22     Aug 28, 2008

  3. Trust: Nobody can truly trust a quant-based system. However I'm more than happy to provide a free dry run for 2 - 4 weeks depending on discussions. That way they can figure out if it's something they'd like to use as either a complement to their trading or as a strategy independent of their current trading.

    Expulsion: Odds are against this happening. Let's assume for the sake of the discussion there are 5 Users with average trade size of $25,000. Let's say results showed a 400% net gain on each trader's average trade size (assuming consistency in trading).

    $100,000 net proceeds
    x 5 User
    x 10%
    = $50,000 of income to me for very limited effort (it's all macro-ized in a separate MS Excel workbook), very little expense, and essentially no risk.

    Duplicate that example for the second year.

    $50,000 virtually-risk-free income to me

    OR if I traded it on my own

    $50,000 * 400% = $200,000 while carrying risk, quitting my job, paying for health insurance, etc etc etc

    The risk/reward is best if I stay out of the game and coach through my indicator, earning money off each touchdown the wide receivers and running backs get. $50,000 on no risk (plus career income) or $200,000 on risk (without career guaranteed income). For me it's a no brainer... others may disagree but this is specific to me.
     
    #23     Aug 28, 2008