What value is an auto label program with 80+% accuracy?

Discussion in 'Automated Trading' started by ProfLogic, Feb 11, 2010.

  1. The following question is not a solicitation for the sale of a program but simply a question of perceived value. I repeat, the program I am describing does not exist. This is simply a hypothetical scenario where I am looking for psychological results.

    Let's say that you could load a program on your own personal computer that would label the highest probability trade entries and exits on any chart increment you choose; scalp, intraday, swing or position where the win rate was 80%+ and the draw down was no more than 1% on any single trade. This program will not self-deteriorate with time. This program would work on stock, future, commodity, option or ETF charting.

    Would this program be of any value to you? Would this program be of any value to the industry? What would the ramifications of this program being put into mass circulation? What would you pay for this program?
     
  2. Loki45

    Loki45

    Problem is, the world (internet) is full of trading programs that promise to make money like your hypothetical program. Many people who tried auto trading with purchased programs have been burned and will now say something like: If it sounds too good to be true, it probably isn't. If you want to sell it, you would have to show lots of credible supporting facts, like backtesting results or videos taken from live trading action. Offering a free trial period would also help.
     
  3. All that is a given and I agree with your points. So let's assume the program is verifiable.
    My interest is in the questions, if you can answer them.

    Would this program be of any value to you? Would this program be of any value to the industry? What would the ramifications of this program being put into mass circulation? What would you pay for this program?
     
  4. Corey

    Corey

    The win rate doesn't matter -- it's the profit potential. If you can only trade this on one contract, it is worth a lot less than being infinitely scalable.

    Basically, you want to set it up as a net present value of cash flows problem. What is the yearly cash-flow of this system? What is the appropriate discount rate? Only then can you figure out what it is worth.
     
  5. I agree with your points. So let's assume the program is infinitely scalable. You can do the math based on letting it run on the ES and get a good idea of value.

    My interest is in the questions, if you can answer them.

    Would this program be of any value to you? Would this program be of any value to the industry? What would the ramifications of this program being put into mass circulation? What would you pay for this program?
     
  6. Ok, I will bite.

    Assuming a reasonable trading frequency (i.e. can't trade once a month or even once a week, must have enough trades to make it worthwhile to trade it). And average profit must be at least half a percent per trade.

    $1 million, plus 5% of profits going forward.

    However I have little faith that you, or anyone else, can develope such a program. Or would part with it at any price if you could.
     
  7. If the program is used by a sufficient number of traders it will lose its profit potential very fast. Simply put, it will not offer any edge.

    This is what happened to TA as a whole after it was popularized. I can tell you in the mid 1980s one could make a killing trading simple MA crossovers simply because not too may were aware of these techniques. After TA was popularized all techniques lost their profit potential.
     
  8. Not much IMO. Your assumptions aren't believable.

    Are you polling for marketing or what's the deal? There is an ulterior motive here. Are we your free focus group?
     
  9. i agree. obviously, such a system would be the proverbial golden egg-laying-goose. what did aesop have to say about that?

    this query is neither provocative nor intriguing. in fact, it's downright idiotic.

    so whazzup, professor?
     
  10. The point of this is not an offer to sell a program but to answer the questions.

    Would this program be of any value to you? Would this program be of any value to the industry? What would the ramifications of this program being put into mass circulation? What would you pay for this program?

    You answered the first and last question, now can you answer the two in the middle?
     
    #10     Feb 11, 2010