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Having no RR means blowing up the account.
Having a RR means blowing up the account just in a different way if this were the key to successful trading.
If RR is the key to succesful trading, there were an automated trading algo with this RR on any strategy. Unfortunatly I
don´t know one single algo like this.
Waiting, Discipline and Patience Pays!
Can you help answer these questions from other members on NexusFi?
Your dad is a very wise man. I follow his practice as well. I stare at chart for 2 hours per day and have fun and guess and trade with my gut and skills in real time. I am always in tune with the market at the present time. I try automation backtesting and too much hard work require and back test and optimization takes very long time. And I never trust the optimization to place money on it. Also, trading ideas too hard to find. Better for me to guess trade every 2 hours per day.
The only way I would do algo trading is build an algo and let other people invest in the algo at one of these brokers website to make money monthly. This way I get paid rather the algo makes money or not. Of course, i would test it for edge, but win win for me.
Thanks @goodoboy. There is no single right way to do this. I have known some other system/algo developers who have gone this route, either because of under-capitalization or they do not want to be involved in the trading side.
The #1 goal in trading (day trading, algo trading, discretionary trading, monkey trading, dance trading, Donald Trump Trading, Obama Trading, etc.) is to make +$500,000 per year and trade with size (alot of contracts).
It is stupid to me to have algo(s) that have proven edge and can not trade up to big contract size for the algo(s) or have other people invest in my algo(s) and I charge them a monthly fee.
You have just said the entire hedge fund and managed money world (along with signal sellers, etc) is stupid.
It is all about risk - and is actually a great business to be in (ask any hedge fund billionaire).
A signal seller, hedge fund or CTA can get money upfront (management fee, subscription fee), regardless of performance. And then hedge funds/CTAs get 20% of profits. All with basically ZERO downside risk. Sure they can have $0 income if they suck, but they won't lose money like they could if they were trading.
If it makes money and it is Legal, it makes sense. Sell It and Do It.
If I was to get into algo development, I run all my systems at striker.com or optimusfutures.com to make about $100 per customer (or per contract). As long as the algo makes money, I make money from the algo and I make money from the customers monthly fee.
So, I am confused, are you saying that plan is a stupid thing to do, or not?
I should point out that signal selling sounds simple, but the reality is a lot different. You'd need a lot of really good performance to attract subscribers, and then most would bail at first significant drawdown. But good luck if you try!
Of course you need to be an accredited investor with Dunn and not too many folks have pockets that deep. There are trading costs, of course (commission, etc.), but they only keep the lights on if they keep making money, which is how it should be.
There was a great discussion on the TTU podcast a while back regarding management fees in which the guests were pretty critical of them. One of the firms on that podcast stated that they require new systems to be traded with the owner's capital for a couple years, before that system is added to the program (portfolio). Incubation by fire.
I am saying that is idea is smart and great business sense.
For example, if I have an algo right now that I believe have Edge. I bet my money on the algo and run the algo at striker or optimum futures for other clients/customers to invest in the algo. I make money off my investment and monthly fee from the customers.