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Why your quant trade systems gives edge so don't sell it for millions

(Last Updated On: May 18, 2010)

Here is a conversation on reddit.com which pretty well inspired me tostart thinking about blending my knowledge of technology and financial investment. This was pretty inspiring where an indie software engineer launched his own business. He is now clearing in the millions per year. Source was:

IAMA 100% automated independent retail trader. I trade around 800k to 1.5 million shares a day and make 2cents/trade on average. AMAA from IAmA

whatswith_this 1 point2 points3 points 6 months ago[+] (3 children)

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sell your program for thousands?

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mejalx [S] 11 points12 points13 points 6 months ago[+] (8 children)

mejalx [S] 11 points12 points13 points 6 months ago[-]

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Why? Edges are short lived, I’d rather squeeze out every penny I can while I can. I’d sell a model after it quit working, but I’m not a douche bag.

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Felix_D 1 point2 points3 points 6 months ago[+] (7 children)

Felix_D 1 point2 points3 points 6 months ago[-]

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I’m not sure what you mean by “edge”? Could you please clarify?

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AnonysaurusRex 2 points3 points4 points 6 months ago[+] (6 children)

AnonysaurusRex 2 points3 points4 points 6 months ago[-]

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Edge = advantage.

At the moment his system gives him an advantage over other traders, this advantage is known as an “Edge”. If he sold his system, he would be giving his “Edge” to other traders and subsequently, loosing his advantage.

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cookiecaper 0 points1 point2 points 6 months ago[+] (5 children)

cookiecaper 0 points1 point2 points 6 months ago[-]

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And so the question becomes: will guy make more money selling the “edge” while it’s good or just riding it out and keeping it to himself? If he sold the program for $500 and then just charged $250/strategy and staggered the release a little bit and/or charged more for better strategies maybe he’d make a ton of money. It’d be a good way to help people who need the cash and maybe, I don’t know, but maybe it’d make more than just keep that strategy to himself and waiting for it to die out.

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omargard 0 points1 point2 points 6 months ago[+] (4 children)

omargard 0 points1 point2 points 6 months ago[-]

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Sell a program that makes millions for $500? That’s funny.

mejalx believes his strategies could work with ten times the amount of money(volume). If he sells his edge to more than 10 people with the same amounts of money, or one person with 10 times the amount of money to “invest”, they have to share the profits.

Probably a big fund with $1B available capital and faster connections than mejalx (and people like you) would buy this program for $500 – lol – and exploit the edge to the maximum, leaving nothing for you.

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komphwasf3 0 points1 point2 points 15 days ago[+] (0 children)

komphwasf3 0 points1 point2 points 15 days ago[-]

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Well, maybe that number is off, but I’d think of it like selling a car, when the machinery used to make it is worth $ten million.

So cookiecaper’s idea is sound, but omargard is right in that if it were sold, it’d probably be sold for closer to $10k or $100,000k, since it earns millions

Although if it breaks down any edges, then it’s not a good idea to sell it

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cookiecaper 0 points1 point2 points 6 months ago* [+] (2 children)

cookiecaper 0 points1 point2 points 6 months ago* [-]

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Uhhhhhuh. I’m sure he could find plenty of corporate buyers. Really, I just made up numbers for fun.

And it doesn’t make millions all the time, especially not if multiple people have it. He can sell the base for something reasonable, give starter algorithms, and so on, and sell them for more as more goes on. Also, I don’t suggest that this become a mass-market endeavor; just something to keep between friends.

ANYWAY, doesn’t matter.

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