What it takes to develop a profitable trading system?

Discussion in 'Options' started by Aquarians, Dec 28, 2017.

  1. Here are the steps in my experience:

    1) Initial know how (math, programming, financial markets).
    2) Backtest system to research & develop trading strategies.
    3) Live (auto) trading (even if #2 is not great, because present reality is often different from the past snapshots).
    4) Analyze why you're not making money, tweak / improve and goto #1.

    Question is how much time passes until you're consistently profitable?
    Question number 2, how much money does that time value?
    And question number 3, how and if $50k can significantly speed up the process?

    Right now I'm entering another cycle starting from #1 (new knowledge), with high hopes this is the last time. If not, I'm thinking on hiring / collaborating with someone.

    I'm thinking on posting an ad on UpWork but I see problems with this approach. Apart from the confidentiality of my stuff so far, main problem I see is that this is not the regular "fuck you, pay me" developer job you see there. You just can't "sudo make me a profitable trading system" someone, even if you pay them :)

    It's pretty much a catch 22. The guy who's capable of developing a profitable trading system doesn't need a job on UpWork, he should be making millions with his own stuff. And the other guys I'm essentially having to teach them my system so they can leave and make their own millions with it when it's ready, all while paying them a living wage to do so.
    SimpleMeLike and MACD like this.
  2. RedDuke


    How do you know your staff works if you not even at backtest engine stage yet? Eyes could be very deciteful.

    If you need help with technical know how, pm me and I can provide some tips.

    And to answer your question, it takes insane amount of work.
  3. sle


    Actually, your best bet is not to hire someone, but rather go work for someone for a little while. There are plenty of people out there that can use your skill set to research new ideas or implement/improve existing strategies. After some time, you will find that you understand the process and will start getting ideas of your own.
    alex314159 likes this.
  4. I've got a backtest engine (about 30,000 LOC of Java) + PostgreSQL + historical marketdata + live data subscription. And a simple but functional auto trading app, still Java, interfacing with Interactive Brokers. And 10 years as quant developer in finance. I know it takes a lot of work :)
  5. truetype likes this.
  6. sle


    No, I mean work directly inside a money making group. Being in a support function is not going to teach you anything about the stuff you want.

    PS. If you go to an interview and see a guy that has zero understanding of your IT skills but knows how to make money, that’s the job you want :) “we have a trading strategy implemented in Excel/VBA and want to make it a bit more robust”
  7. There's always constantly lingering inherent dangers in the market. It's all about how you're able to perceive and act and react accordingly to it...in real-time, without getting too razzled and mentally distraught.

    If you're overly cautious, so much so that you can't step one foot into the trading war zone battlefield...be someone's accountant instead, behind the safety of a desk.

    Don't search for a profitable system, instead work on developing a profitable you. Embrace the unknown future.
    Good luck and Mazal tov and May the Farce be With you 2018
    Last edited: Dec 28, 2017
    Handle123 likes this.
  8. qxr1011


    ====What it takes to develop a profitable trading system?===

    depends on how profitable one needs it to be, and who's money at risk (yours or clients)

    if we talking about the usual wallstreet stuff: your ideas and client's money with anticipated performance not worth than the street's average - nothing special

    if we talking about trading for a living, using your own money - monumental task and your list of steps missing an extremely crucial component - finding the laws governing the market movements,

    man, you (or any aspiring trader) need to make something analogous to discoveries in science, without that all those back-testings , front-testings, tweaking, programming - just another form of masturbation

    good luck
  9. >> Being in a support function is not going to teach you anything about the stuff you want.

    I know. Again, been there, done that :)

    >> I mean work directly inside a money making group.

    Well, thanks for the advice but it's in about the same probability group with "go look for some flying pigs, they're abundant in some areas".

    So far the choices I have control over still are:

    1) Work by myself.
    2) Hire someone.
  10. sle


    All right, what do you think was your failure? Is it the strategy hypothesis, execution costs, over-fitting? Why did your strategy work in the back test but failed in real life?
    #10     Dec 28, 2017