WHY ARE PEOPLE SELLING THEIR SYSTEMS? DO THEY WORK?
The problem I see is there are opportunities every day in the markets but not everyone can take advantage of it, some will fail where others will win because everybody has a different perspective to the markets. This leads me to the trading robot, it is after all, a trading system designed by someone, if it works, why would one sell it? they would be better using it to make money instead. Maybe the system does not work? It could be just a selling pitch after all to make money unless one can use it for say a week to try it out, if it doesn't work, its not worth the money. The product should be guarantee to make money but we all know what the answer to this question is.
To prove it, one has to use it to determine its success but usually one cannot use it before it is bought, so if you were to buy it to test out, the seller would have achieved its aim and you would be left with it to test out, you will then discover the answer which you already know the answer.
I know you didn't write it here on my journal but on
this thread, but I'll reply here so to keep my wisdom all together, in one place. I copied it here because it's an intelligent question (because I asked it before). I'll now proceed to take a bath, after reading your question, and then come back and reply to it.
[...bath...]
Some quick thoughts while I dry off, and then I'll write more from work.
By what you said, even though you skipped a few logical steps (in the sense that you didn't write them down), you seemed to reach the conclusion that robots are better because in our minds we might be unable to pick the right opportunities among the many opportunities we get every day. I agree, as far as my case, I reached the same conclusion. There are other people who wrote on this journal who managed to learn to pick the right opportunities and be successful at discretionary trading.
So you now are thinking of automated trading. And you say: if these programs work, why are they selling them? It's the same exact question I ask myself all the time. I am not sure that all those selling the programs are
charlatans. I am sure that some of them are, but I am not sure that
all of them are. Then the question is: why would you sell it if you can simply make money by using it yourself? But we can't ask that question until we know if and who is not a charlatan. For sure we can say that some people are teaching (not selling systems) discretionary trading, on the internet and on web sites, simply because they enjoy teaching. They've got the money and they now are bored and many of us enjoy teaching: I am one of those people for example (even though I don't have money yet). So I can relate to people teaching and therefore I think there are traders out there that are actually teaching profitable discretionary methods. Only I still do not know if there are traders who sell profitable automated systems and then I'd like to know why as well.
I'll write more when I'll get to work.
[...getting dressed and going to work...]
Ok, back. We were saying... yes, I still do not know if there are traders who sell profitable automated systems, and then why. The question I'd first raise is: doesn't selling your system make it less profitable? I would say yes. But then others might even argue against it. The reason is this: you sell your system, and then whereas buying at x opportunity was convenient, with many more people doing the same thing you're doing prices will rise, and it will become less convenient. This is basically the only reason why I am not selling my systems even though many people advised me to do so, but then again it was people who are not experts in this field. Besides, I rarely follow other people's advice anyway.
DO NOT SELL YOUR SYSTEM IN ALL CASES...
I think that ultimately you should - in all cases - neither sell your systems nor invest other people's money and for the same reason: if your systems (and you) are
not profitable, then you shouldn't be ripping people off, whereas if your systems (and you)
are profitable, then you shouldn't let other people take profits from you (either by following your same signals on their own, or by
making you follow your own signals with
their capital, when they give you their capital to invest).
...BUT YOU COULD BE DESPERATE FOR CAPITAL
On the other hand, I do realize there is one big problem that might make me do otherwise one day, or that at least has tempted me in the past to act otherwise and that problem is
undercapitalization. For example, I remember one day I was on another forum and I was so undercapitalized (I had a few thousands of dollars) that some guy sent me a private message and told me that he had a company and if I gave him my systems he'd use them and give me part of the profit. Ah ah... I believed him and sent him all my systems - that thank god weren't as good as they are today - and he replied to me that they were no good basically, and disappeared thereafter. That's one case when despair made me act like a total idiot. Hopefully that guy was in good faith and never used my systems, but I have some doubts about it. It's possible that he used them and even sold them. Oh man... what an idiot I was. However, when you have no money it's as if you had nothing to lose, and you say to yourself: "what do I have to lose? If I don't take this opportunity I'm going to be broke anyway...", and then you grab the opportunity. These people, if they are in bad faith, are really
callous.
CONCLUSION: SHOULD YOU BUY THESE SYSTEMS? NO, BUT LONG ROAD AHEAD
Conclusion and back on the topic. The real question, originally, seemed to be just this:
should one take the chance of buying one of these systems they are selling? My answer, as a system developer, would be quick:
not at all, build it yourself.
Then, the next thing I realize is that obviously no one can do that
right off the bat, even if they were programmers, which is rarely the case with traders, but which is often the case with automated traders. And this leads me to my next recommendation: become a programmer, like I did. I taught myself vba. You can do the whole thing in a few years.
But that of course discourages almost everyone, because no one will accept to do something that is not immediate. And I didn't do so myself. I thought profit was always around the corner, and that's what kept me working for 12 years: each time I thought I was this close to making it. And finally I would say that I've made it (even though I almost don't have any money yet) and I have to thank for this my delusional state of mind which has made me think that my success was around the corner despite the fact that it still hadn't happened after 1 year, 2, 3, 4, 5... 12. It's really amazing.
So, back to the point: very rarely someone will accept to undertake a task that will require years to complete. And as I said I succeeded because I was delusional enough to think every day for 12 years that I would have been profitable starting today. So my conclusion regarding automated trading is the same that I draw in my profile's "Favorite Trading Tip", that is you have to be an obsessive-compulsive narcissistic delusional maniac in order to do it:
Favorite Trading Tip
For discretionary trading you need first of all a specific and rare emotional balance, which is very hard to develop if you don't already have it. Hard work is not enough and may even hurt you (overtrading). For automated trading instead, the first thing you need is hard work, whereas your emotional balance won't matter or may even hurt you: being an obsessive perfectionist is a requirement. Most people are not balanced enough to be profitable at discretionary trading, nor are they imbalanced enough to be profitable at automated trading.
You have to be delusional enough to think that it's easy and that god has chosen you to be the one who will make it happen, and then you have to be enough of a maniac to actually make it happen, little by little, all by yourself. Once you see your objective clearly (making it happen), it will come all by itself. You will work incessantly for it to happen. But regular people have many other interests in life, and will lose focus. They won't be focused enough to make it happen. On the other hand, if you are a programmer, and you are very very smart, then you could even make it happen without renouncing your regular life for a few years like I did - I didn't have a life to begin with, and that helped. But in this field, things and meanings get reversed. "
Loner" is good. "Social" and "popular" are bad: these things lead to wasting your time, and not getting things done. That's why I am not wasting any time trying to please the crowd and making this journal as personal as possible: I don't want to attract the regular people, because those people will never be any good at automated trading. If anything, I'm trying to scare them away by writing these long, original, personal and artsy posts of mine (which without any doubt they call "weird", because to them everything is either "weird" or "cool"). They'd be wasting my time and their time anyway.
THE POWER OF THE STEP BY STEP APPROACH
It's amazing how easily things get done with the step by step approach. Even this post: if you told me that I had to write a paper in (voluntary) reply to your post, I would have answered "no way, I am not gonna do it". But, little by little, I ended up writing an essay. Long, precise, logical, well-structured. It has been a lot of work, but I've done it without feeling almost any fatigue. In the same way, if you had told me, 12 years ago, that I would have done all this work (testing, automation, etc.) to achieve profitability and still would not have had a fortune, then I would turned it down and said "no way, too much work, not worth it". But I thought it was easy and so I embarked on it. Then, once you start, it's harder to say "not worth it", because you feel that if you stop you'll throw away all your past efforts (therefore the more you work the harder it is to quit, especially if you feel the objective is getting closer to being reached).
I CAN'T LIE, OR RATHER: I'M INTO THE HABIT OF TELLING THE TRUTH
So maybe instead of telling you the truth, and discouraging you by saying you have a "LONG ROAD AHEAD", I should have told you "it's easy" and "you'll be done in no time", but I can't lie, I can't bluff and I can hardly even just hide the truth. That's what I've been taught, I can't undo it, also because I believe it's good. Telling the truth is good, honesty is good. Anyway, the consequence of this is that I am not the most motivating person. Often, when I say "you have a long road ahead", I also add "you might as well quit from the start so you won't waste any efforts uselessly". Yes, because most people are going to quit anyway, so they should save themselves a year or a few months of efforts. That's what usually happens: people say "good, I am going to do what you did", and then they cop out of it, one way or another.