Accounting question regarding automated trading systems

(Last Updated On: September 7, 2011)

Accounting question regarding automated trading systems

Could trading strategies and/or trading algorithms be capitalized as identifiable intangible assets on the balance sheet? While I am on the fence with seemingly discretionary strategies that may be written down and explained, I would think hard-coded trading algorithms would fit an intangible asset description since it would be possible to sell/separate them from the company. Please offer your ideas, and if you have industry experience dealing with this question, and how it is usually handled (reported or not, amortized or not, how valuation of such assets work, etc.)

Thanks in advance,


, I think one of the primary issues would be if you sell the system vs use the system. In that sense, is a trading system really any different from an inventory system for a retailer?


I don’t see why not. There are some reasonably well-understood practices for valuing other kinds of intellectual property, for example when doing a company valuation for sale. I don’t know whether you can or must report the values of intangible assets in any given industry – you’d need to ask a tax lawyer on that one. The question is what you’re trying to get from it.



NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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