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Selling Systems

  • #1
  • First Post: Aug 15, 2008 11:24pm Aug 15, 2008 11:24pm
Please help me with the answer to this hypotetical question.

Assume I had a crazy winning system; super profitable. I don't have this, but let's pretend I did. Would big financial companies be interested in buying my system? (Remember let's assume that my system was very very good) Do transactions like that happen? What do you think a big company would pay for something like that.

I know no one has the exact answer here, I'm just curious.
  • #2
  • Aug 16, 2008 12:40am Aug 16, 2008 12:40am
depends on what you understand by "big financial companies".

i'm pretty sure the truly big, important investment banking firms use advanced econometrics and the like for anything they do.

unless you have something substantiated by real econometrics and can explain in detail why your system is so profitable and in what are its faults, i don't think anyone from those companies would be interested.nobody cares how much money a system can make at a certain moment, it could very well be luck...capital conservation is more important, probably even to a hedge fund, given that so many of them have gone bust lately.

from what i read, pretty much everyone working as an analyst or in development for an IB knows real econometrics, not the bollinger bands, fibonacci etc type of pseudo-econometrics used by most private traders.
  • #3
  • Aug 17, 2008 10:19pm Aug 17, 2008 10:19pm
Quoting tenantro
depends on what you understand by "big financial companies".

i'm pretty sure the truly big, important investment banking firms use advanced econometrics and the like for anything they do.

unless you have something substantiated by real econometrics and can explain in detail why your system is so profitable and in what are its faults, i don't think anyone from those companies would be interested.nobody cares how much money a system can make at a certain moment, it could very well be luck...capital conservation is more important, probably even to a hedge fund, given that so many of them have gone bust lately.

from what i read, pretty much everyone working as an analyst or in development for an IB knows real econometrics, not the bollinger bands, fibonacci etc type of pseudo-econometrics used by most private traders.
Tenatro, so what exactly IS 'real econometrics'?

Just, interested.

Good Trading, Leon.
Living the adventure in my head.
  • #4
  • Aug 18, 2008 7:15am Aug 18, 2008 7:15am
Quoting jubar83
Please help me with the answer to this hypotetical question.

Assume I had a crazy winning system; super profitable. I don't have this, but let's pretend I did. Would big financial companies be interested in buying my system? (Remember let's assume that my system was very very good) Do transactions like that happen? What do you think a big company would pay for something like that.

I know no one has the exact answer here, I'm just curious.
This is a good question actually.
  • #5
  • Last Post: Aug 18, 2008 8:30am Aug 18, 2008 8:30am
Quoting jubar83
Please help me with the answer to this hypotetical question.

Assume I had a crazy winning system; super profitable. I don't have this, but let's pretend I did. Would big financial companies be interested in buying my system? (Remember let's assume that my system was very very good) Do transactions like that happen? What do you think a big company would pay for something like that.

I know no one has the exact answer here, I'm just curious.
If by big financial companies you mean investment banks, I can personally say from first hand experience that they don't. There are plenty of in-house traders and quants, and programmers, and strategists and analysts to bother with that sort of stuff.

This isn't to say they don't pay attention. People which amazing strategies don't sell or license them. They start hedge funds, and these banks invest in those hedge funds. That's generally how it works. You get the bank's money in your fund, and your strategy makes that money grow.
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