Many foreign brokers are now coming into India. I am looking for a trading system for the NSE India Exchange-Futures market segment. Yahoo gives a real-time feed free for the exchange for the cash segment & IB too gives a free feed for the exchange, for both cash & feed, if someone is interested in developing a system that fits the Exchange.
I have 1-12 friends in addition to myself who would buy a good system, if developed by someone?
it is unlikely that anyone will sell you an ACTUALLY WORKING system. What you will get, is an abundance of trash for your price. And you WILL likely get offers from people like that. It won’t work for them or anyone else, so they are happy to sell it to you.
I personally have only several methods that work for me, and I know it would take a lot of money to turn it over, more than you likely would want to spend. And I suspect it would be the same for most other traders on C2 who actually have 1+ outperformance edges that really work.
It takes a lot of blood, sweat and tears to create a “good” system - years and a lot of work and some losses - for me, I have been trading 20 years and spent perhaps > $40,000 in “tuition”. Waving a couple of thousand of dollars for something like that is not particularly enticing to others. You are not even covering more than a few % of its value.
Not to mention, many trading edges are in illiquid stocks or markets, and the trader is not going to want to have to compete with “12 traders” or a company, who may cause his edge to degrade. If something like Lumber trades 2,000 contracts a day, I don’t want a corporate entity putting in 200 contracts when I would put in some.
My guess is, that perhaps 0.3-1% of traders make a Longterm, Lucrative, Stable living from their trading. And most of those probably work in the industry (prop firms, hedge funds) or are pure price action (PPA) traders. And it would be a struggle for most of those PPA traders to either teach it to you or program it. It would be like a neurosurgeon trying to teach his profession to a high school grad. He can explain it, but the HS grad would still not know what he is doing.
So again, you are likely to find yourself getting and paying for something that is little more than a backtest, that does not work in to the future. And I am sure you will find that in abundance here.
How would you know it works? Even the “good” systems on C2 are usually not. They may look good for a few months, but you are getting the accidental “lucky” system that within weeks or a few months, will most likely randomize. And by then, you are unlikely to get your money back. I will add though, there are several systems on C2 that are probably good. But you need to look past the equity curve to its stats. Things like Profit Factor=1.2 or APD=0.11 or low Sharpe or only a couple months old or only a few trades should scare you away. The system is unlikely to work for anyone.
And it is unlikely a real edge would be turned over to you for a “trial period.” because then, you would have the logic.
And as for edges on the “Indian market” - I have not seen anything like that here or elsewhere. U.S. or European instruments represent almost everything I have ever seen in a system (bad or good).
And bringing in someone to code a system is useless, UNLESS they bring 1+ serious edges. You cannot just plan writing a program that makes money. Almost all of them will lose, especially after factoring in slippage, disruptive world events that slash your likely leveraged accounts, trading fees, broker or user errors. And the good traders are not in a hurry to give it away for small prices. You get what you pay for. i have seen things like EBay “systems” for $39 that “have great performance.” You gotta ask why the seller is selling it!
I worked at a couple I-banks, and I know for a truth that they would never turn over their expensive logic (or even let you use it) for the amount of money you are likely to offer.
For what its worth, that summarizes what I have seen. Although Beau W. was “offering” for $8.5 million, I still think you will find the true cost of a serious edge is going to exceed $75,000 and probably a lot, lot more. If it was that good, then it would be targeted by at least one corporate entity who either wants the system or the trader. And they know they are not going to get it for small amounts.
Good luck…
Thanks for your very informative post. And I agree.
However, what I was posting about was someone putting a strategy/signal tailored to NSE India futures, on C2 rather than giving me his golden egg 
You see there are hundreds of signal selling services in India. But there is no single platform like C2 in between. Guys are making their claims, in newspaper ads, through brokers, through mailing lists & through their web-sites, but I really think that most of them are polishing their results but taking out most of the losses.
And the advice usually given on SMS etc., is mostly chart based breakout that many times has no pre-planned exit strategy behind it.
Anyone having a good working strategy on collective2 should not have much effort modifying his strategy to fit the NSE indexes and about 187 stock futures currently traded, maybe all 2800 plus stocks. A lot of back-testing and tweaking should make a system that is good among its peers on C2, a KING on the NSE niche.
It will have the early mover advantage, as the Indian market grows more and more in electronic trading and more & more foreign brokers come in.
Take myself…Interactive Brokers launched in India. I became their client. I came to know of their API. Started looking for a Software that would automate the trading, or as much as possible and found NinjaTrader. Through it or during research meanwhile I found C2.
Now I find that if a NSE strategy was published at C2, I would be able to see their stats and the trust factor for the service would be much higher.
In addition, as IB has launched in India, all IB customers have direct access to the emerging Indian market, which was something only FII had access to earlier, due to red tape.
Any developer putting up his system would have a niche, where he would have few competitors. And believe me…the number of users from India will be phenomenal in the next few years. If we have anything, we have one hell of a population. It takes a very small percentage of the population to climb aboard a gravy-train and you have one of the largest userbases.
Since currency is 1USD/48 INR, the average revenue per user would be much lower than you guys are used to, but if you take your absolute revenue, id take a futures bet that in 5 years, it will be a very much higher than the average signal seller gets on C2.
It has happened in Insurance, it has happened in telecom and now it is happening in the financial industry. Connectivity & FIX, added to our being less exposed to world recession (due to our own consumption), are going to take Indian markets to places we have never seen before.
With regards.
Sanjay.
Sanjay,
I see your point about trading systems for Indian stocks/futures aimed at Indian customers.
There is certainly enough liquidity on NSE to deploy a trading system and enough potential customers. Price data are available from a number of vendors, so technically there is no prob.
Trading systems depend on repetitive price patterns and such systems are easier to implement in more liquid U.S. markets with lower transaction costs.
Do you think that Indians would prefer to trade only Indian stocks? Or they would rather migrate their money where profit opportunity is?
So far global customer base for trading signals is very small and this investing style is not widely adapted. From business point of view it is probably too early to target any single market.
There isn’t a lot of meaning to particularly target NSE. Liquidity, “emergency” (heh) market that involves additional risks and so on. Population (potential subscribers base) is good reason only for scammers and you already have to compete with domestic scammers lol.
More seriously “emerging market” involve serious risks. So potential profit (not from subscribers) should be very high to make any trading in emerging market reasonable.
Eu
P.S. Poor, poor Ross aka Index aka so on. Waste so many for an “education” and still be just trading forums troll. (cannot handle myself, when I see the poor kitty.)
Average Indian Investor is not yet ready to invest in the International market. HNI Indian Investor is already doing this for years.
I think average Indian investor would primarily trade in Indian Instruments, without any cross-currency implications or regulatory issues, plus the attached highly fluid/volatile markets.
However, Indian Investor is quite savvy. A proportion of these is going to evolve to trade in multiple markets. Many are going to be prompted by unscrupulous brokers and I personally believe that many are going to get their fingers burned in the initial waves of investment (& I think the govt. also takes this view…as leveraged investment in foreign markets is not yet allowed).
Referring to your statement regarding global customer base for trading signals being small…maybe. But India is one market pre-disposed to it and it does have the customers in numbers. Most of India trades on recommendation of a trusted friend &/or trusted broker. Hundreds of thousands of investors have relationships running into years or even decades. This is why signal services are prospering here…it is not advertisement, which makes them grow…its user referral. Only issue is that the gems are few and lots of new young investors willing to believe in their older generation’s adviser in its new SMS format BUT choosing it through Advertisement method rather than the referral method, hence many will loose to the sharpies. I read someone saying that nobody is faster than a fool in a hurry to part with his money.
it does not matter where you invest. It matters that you only invest when you have a qunatifiable edge. Trading systems are offered by friends and strangers alike. But you gotta ask why are they selling it if it works. 99% of them do not. And the ones that do usualy do not last once the market geometry/structure changes. For example, the time when the market collapsed (Dow down below 7000) was one market. The time after when the market surged is another. The time before the market collapsed was another.
Rarely does even a working system work in all such types. A smart person trades different instruments, at different time scales, and learns how to trade for himself (using pure price action is one area).
But many people chase the easy: Tech Analysis indicators, Elliott Wave, Gann, Fib, “hot tips” and many others. That is one major reason why it is believed that 95% of people who trade lose their money. If it is in something like “Trading for Dummies” then it likely does not work.
Poor money/trade/portfolio management is another major reason.
I worked on one of the world’s largest exchange floors. Electronic trading is taking over. But algorithmic trading (bots, etc.) is taking over even for the human trader. You should have seen how many of the electronic trading desks were being used by non-trading staff on the exchange. IT and other roles rae taking over. In 10 year, professional traders may be between rare to a minority to the logic written by IT and trading staff. It works 24x7 and weekends also. It does not suffer from emotions, and it can be constantly improved. It does not needlarge bonuses or salaries. Arb strategies and other things are how the big institutions make money. The little trader at home faces a lot of competition.
Well said ;-)…Eu
Competition to C2 or other scammers from local Indian Scammers will be tough There’s no escaping that
But still, on a serious note, there is a niche potential and demonstrable signall sellers will have a better USP.
Regarding risks investing in Emerging Markets…simply start ticking off institutions who take emerging market risks from your portfolio and you will have done away with tons of Major Institutions, ETFs & Mutual Funds etc., off your portfolio.
So although out of scope of my original question, the question is, Should & when should good traders start trading/investing in emerging markets…my submission is…its high time…traders compete with these very institutions in evolved markets…why not emerging ones.
Again, the issue of fundamental vs technical analysis comes up…fundamentally speaking…western markets are losing marketshare in products & services, even the consumption of emerging markets is beginning to make its mark vs. the developed world.
So, I guess, I would say …why not invest/trade in fundamentally strong markets with a growth story than otherwise.
But then thats my outlook, others are entitled to theirs. I would like to point out that figures state that Foreign Institutional Investors are the most profitable in the Indian Markets. I suspect that’s due to better technology. If you think the same, should you not be in Indian/Emerging market?
Ciao.
Sanjay.
I agree to every single word of your post.
Sanjay.
Well… I had a deal with emerging markets (Russia, Brazil) so I wouldn’t accept usual pro-country/government advertising as good reason for investing even 1 cent to very unstable economics. India is emerging market with all correlated risks. You have to admit it. As usual trade it yourself and become rich (smile)
Eu
