Marketing Systems

Discussion in 'Professional Trading' started by pierson, Aug 21, 2005.

  1. pierson


    I had a group of friends ask me tonight why i don't just sell different methods of mine to avoid all of the risk involved in trading, i give them the normal daytrader response of why would i sell it if it works etc.etc.

    but i was wondering....

    hypothetically speaking of course.
    Suppose someone had a years worth of trades where they had around 1000% return on a method with specific rules that they could show account statements for. After this year suppose for some reason they didn't want to trade any more or had multiple methods and wanted to sell a couple for whatever reason.

    Are there any big firms that you could sell a system like this to? I would think they would pay big money for something like this considering if any hedge fund manager gets 30% people think that they are trading/investment god. But i have no idea.

    If so how would one go about contacting these people and coming up with some type of agreement? Has anyone ever known anyone who has done this before? How much do people get for these if it is possible and how much real time trading records are enough to be acceptable.

    I get things in the mail all the time the boast of 1000% return, easy money and all the good stuff. For 10k it can all be mine they usually say. If they are this good i would think a big firm would pay millions for a method where returns are backed with actual statements and there are like 200+ trades in a year so you know it just wasn't some lucky guesses.

    This thread is for my own personal interest and knowledge and not for promotion or solicitation of anyone.

  2. I was thinking the exact same thing.

    I would imagine that a big firm would probably not purchase a system but would rather hire you as a consultant get a few good ideas out of you and therefore would not pay outright for anything.

    But they probably already have so many really great systems because their traders develop them willingly.

    Was interested in selling a system myself. Haven't had much interest from the people I've talked to so far. I should probably just trade it myself.

    Learning to believe in your system would be time better spent than marketing away your little baby imo.
  3. cosine


    1000% can mean a lot..... of luck. And will most likely.

    Hedge fund managers with 30% returns often offer low market correlation and low volatility. They also have experience and economically sound strategies that give a hint to the industry that their high returns are here to stay. Numbers themselves are not enough, you have to back them up with credibility.

    If you really do have high performance, you can take your statements to a professional firm and have them verified and certified. Institutionals will often look at your records not only to see your performance, but also what were your moves. They will want to make sure your strategies were not just random day trading, but sound, opportunistic and low risk trades. However, your track record must be long enough for them not to think you only certified your profitable years and hid your losses.

    A friend of mine has done this, and is now building a high wealth and corporate clientele to which he offers informal investment advices. Obviously can be a very good way to leverage your skills.
  4. Good thread, chances are anyone contributing to it will be accused by the other part of gene pool of orchestrating something, but ignore this and keep your contributions coming. I myself am interested too.
  5. If you still need to learn to believe in your system, then you may want to consider if it is really that good, but apart from that making money with a good system is indeed more hassle-free than marketing it.
  6. I know a couple of people that have gone this route and are paid a very fair amount for use of their system. For an undercapitalized trader, I think that this route is the better way to go.
  7. I think a marketer of their own system has to decide on a number of factors prior to licensing his product to the mass public.
    1. 1000%/yr sounds like a gimic, not legitimate. If one were to assume this was against margin, not actual capital, then it may be more believable (even with an auditted track record). Furthermore, if lack of capital was the reason for licensing vs trading, at 1000%/yr, lack of capital would only be a problem for 1 year! But I understand the original post as being a way to divert risk by licensing, not trading.
    2. Marketer must determine the total number of contracts to trade prior to marketing to eliminate the potential for system degredation. If marketing to a large firm, there has to be a traceable limit established. If marketing to retail user, tracking mechanisms must be in place.
    3. How do you value the system? I'm sure there is a fine line of where one will purchase a system and where one will say "not worth it". Where is this level? Check out some of the leading leased systems....then figure you'll have to run a discounted trial license to whet the user's appetite.
    4. Would the marketer trade the system realtime to support his belief in his own system? If I were to buy a system and learn that the marketer did not trade bc he wanted to divert risk, then I wouldn't be too excited to trade the system myself....

    Just my initial thoughts, I'm sure there is a lot more to add.
    Good topic!
  8. pierson


    Pro-trader, which kinds of firms did they sell to? Were the large brokerages or groups of private investors?

  9. Hedge funds and large private investors.
  10. Just wanted to chime in and highlight what jgfutures pointed out in #2. Is the system or method scalable? Is there enough liquidity in the particular market for the system to work?

    (Smart) Hedge fund managers will not be interested if it does not scale. Of course, many many, managers have made this mistake.
    #10     Aug 26, 2005