How to sell your system

Discussion in 'Strategy Development' started by QUANTUM_QUANT, Sep 13, 2007.

  1. After being a system developer for quite some time I have experienced the “HOW DO I SELL MY SYSTEM?” problem numerous times. The solution to this problem is not obvious and it is much more complex than the developing of the system it self.

    Description of the problem

    1. Inability to answer the question: “If your system works and it is that good why in the hell do you want to sell it? Why not to trade the system your self?” No answer to this question will be satisfactory to one who is asking this question. All the arguments that the system developer can come up with will only result in sarcastic remarks and the further isolation of the potential buyer.

    2. Disclosure of the principles that the system is based on leaves the developer completely unprotected and vulnerable regardless of any elaborated protective agreements that the developer might come up with.

    3. Non disclosure of the principles usually turns the buyer off because he/she would immediately suspect the fraud.

    4. Sending remote trades/signals (real time or look-ahead trading plans) even with the free trial or with the charges in the rears makes the buyer uncomfortable because if the losses occur the buyer has no repercussions against the seller of the system other then stopping the payments for the service and bad-mouthing the seller (which does not help much).

    5. No joining accounts, agreements, NDAs etc will ever work because neither buyer nor seller wants to be exposed to losses or law suits.

    Of course, there is a tremendous desire in the trading community to

    - develop the efficient and reliable systems
    - to purchase efficient and reliable systems

    Fortunately for both parties there is a simple and effective solution to this problem that eliminates the risk and anxiety on both sides!

    Here it is:

    1. The developer creates the system and protects it any way he likes.
    2. He determines the maximum drawdown the system should experience during its operation.
    3. After reaching the payment agreement with the client in case of successful operation of the system the developer deposits the amount of money that would be enough to cover the drawdown on the client’s account.
    4. If the system at any time produced the loss that is equal to the deposited amount the client has the right to stop the system operation and use the deposited amount to cover the losses.

    If the system works the way the developer thought it would then the operation continues. If the system fails the developer only loses the deposit (which could be as little as $250 or so).

    Let me know what you think of this approach. I certainly see my self entering in this kind of an arrangement.

    QUANTUM_CATALIST
     
  2. I would happily be your first client. Of course, the moment your deposit hit my account you can bet I'd be closing my account and withdrawing all funds for a risk-free profit. :D

    The most obvious question I would have about such an arrangement is this: If you're willing to fund the system's drawdown, why not just fund the drawdown in your own darn account and keep 100% of the profits?

    In all seriousness, if your system is decent and has a good track record people will buy it, just as they've bought mine (leased, really). If they give you a hard time as you describe, then they were never going to buy it in the first place. This is especially true for those who can't seem to understand why you aren't trading it for yourself (I happen to trade my systems alongside clients, but I realize that's not for everybody.) Don't let these people bother you. Just focus your efforts on providing a solid value to clients who are actually interested in receiving it.

    M
     
  3. I never understood the disclosure of system logic. If it doesn't work (as most systems don't), it doesn't matter. If it works well, why would a developer give away his hard-won inefficiency to others?

    I think you are making it too complicated. An independently monitored track record (like Timertrac) or lengthy free trial is all someone needs. If it flubs, no customers. If it does well, then customers.
     
  4. I cannot trade (personal reasons) but yet I have a few people trading my system now. I just can't come up with appropriate arrangements with them and it frustrates me enormously. I am tired of people who are trying to tell me how I should be proving the system by trading it my self. I don't want to trade! I just want to sell good systems that make sense. Why do you think GM makes cars and other people driving them instead telling GM to go into taxi business?
     
  5. I have done this. I have 3 year long track record that averages over 10% a month with less than 1% drawdown. But nobody gives a damn! Everyone is trying to make me trade. I am not a doctor - I am an engineer who makes medical equipment!
     
  6. collective2.com, strategyrunner.com, timertrac.com are 3 places you could sell it
     
  7. QQ, I kinda like your concept.

    The obvious question, someone will ask you any minute now, is; How can you protect yourself against unscrupulous buyers with no intention of ever paying you, or even refunding your deposit?

    I guess you'd have to conduct some pretty extensive due diligence on any potential buyer before making the deal. Hopefully for your sake, you have a strong ability to read people- instinctively separating the bullshitters from the honest businessmen. This will certainly help.
     
  8. Is this a live track record that can be documented?

    M
     
  9. Mathemagician already asked it, in the second post of this thread. Didn't you read it?
     
  10. Didn't you?

    He hinted that such unscrupulous buyers exist, but he didn't ask the thread starter how he'd protect himself against them.
     
    #10     Sep 16, 2007