"…there are certain hallmarks of the "evidently sincere" Voodoo system seller…"
Some excellent points there; yes quite common. I have even sat with some professional traders and their managers telling me such things, and seeming to sincerely believe what they were saying.
"…to my surprise… I am finding more and more among people selling stock market investment systems."
To my surprise too at first… but not any longer! Ideas of those sorts crop up so often that I suspect they are, and in fact always have been in one form or another, the norm rather than the exception.
To make some extra $$, and more importantly, to see how my systems perform compared to the others.
Ernest W.
there are a couple of reasons, assuming you have some good strategy that works:
1) live in a 3rd world country
2) can’t afford risk
3) don’t have enough capital
4) create additional money flows
If all of these worth the risk of having the strategy reversed engineered, then do it. For example my strategy I could not reverse engineer myself if I wanted, so trying to sell it makes no harm to me
As a newcomer who’s considering listing a trading system perhaps I can offer some insights. Please forgive the ungodly amount of rambling below, it’s probably just the result of being an overenthusiastic newbie. Or perhaps it’s a genetic disorder. Blame my ancestors. 
1. As far as I understand how things work here, no one is actually selling their system. They’re selling the advice generated by their system. If at some point they become convinced that their system is so powerful that it can make them wealthy, and if they have the capital to fund the effort, then they’re free to leave, taking their system with them. No one here knows how it works, save for whatever the system creator has chosen to make public. So the moment the creator leaves, it becomes the case that he’s the only one who can use his system to trade. Thus he loses no profits due to his system being used simultaneously by others.
2. The system creator controls the extent to which simultaneous online use of his system can reduce his own profits. The only ones here who can use his system are those who subscribe. What’s the average number of subscribers for a profitable system? A good system shouldn’t stop working just because 100 people are using it, unless those hundred are collectively investing so much capital in accordance with the system that they have a distorting effect on the market all by themselves. Is it really that likely that George Soros is secretly getting his trading advice from your system and investing all of his fortune accordingly? And if you’re really worried, you can cap the number of subscribers.
3. If you’re like me, you’re poor. I’ve had a lot of luck with my ETrade account but twice nothing is still nothing. Being an out-of-work scientist trying to start his own R&D company from scratch, I don’t have extra money lying around to invest. I don’t even have health insurance. I’ll be lucky if I don’t have to start draining my ETrade account to survive. And a good patent attorney can easily cost you 10k - 20k per patent just to make sure that you’ve written it correctly. Any income I get from this goes into either my “buy food” mutual fund (which currently consists of two apples, two pairs and a banana, if anyone is interested in mirroring my strategy on that one), or my “pay a patent attorney” fund which, at today’s market prices, is worth about 8 cents. Just having a good system doesn’t mean you can afford to use it yourself. There are lots of ungodly intelligent people in the world, many of them apparently high school students, who are a lot brighter than most of the investment advisors that you’re likely to meet, and are poor enough that even at a high rate of return it would take them several years to build up their pittance to a point where they can become wealthy through investing. In the mean time, this is a good way to go.
4. It’s lower risk, steadier income work than the investing itself. The market doesn’t just trade shares in oil exploration companies, it also trades shares in the companies that supply service to oil exploration companies. Superheroes need sidekicks as much as the world needs superheroes.
5. If you’re poor, and you’re going to be doing the work to make investing decisions for yourself anyway, why not take the extra few minutes to pass on your buy and sell signals (and in my case some general investing advice in the public forum) and possibly get paid for it? When you’re hungry you get your money where you can, and if you can sell the same work twice, you do it.
6. If your system works well you can include it on your resume. Your chances of standing out from the competition for a job in the investment industry are a lot better if you can include having created a successful trading system for use here. Your personal profile can verify your identity to a potential employer if they want to verify your claims, and lots of scientists are hired by financial firms nowadays. Or at least were while there was still such a thing as “hiring” going on in this country. Imagine one scientist who can do partial differentials in his head while reciting Paradise Lost. Now imagine another who has created a trading system, with a publically verifiable track record, which for three years maintained an average return of 4% per month, a maximum drawdown of less than… Which one would you hire to work at your investment firm?
7. It’s fun. The problem of making a consistent profit in the stock market is one of the most intriguing and challenging problems in the world. Your answers will be tested under the most hostile possible conditions: real-world trading. A venue that doesn’t offer the creator any way to profit from his system’s success isn’t nearly as realistic, as far as the psychological pressures on the system creator, as one that does. At the other end of the spectrum a contest with a big prize, like the CNBC “Million Dollar Portfolio Contest” is too short term for the results to really mean anything, and usually gets several hundred thousand competitors. This means that random chance will be such a big factor in the outcome that it’s not worth entering. Here, you can make a decent profit if you’re good, compete meaningfully against a reasonable number of other people with real skill in the area, and have the fun of talking with them about your shared interest at the same time. Who could resist? Now that I’ve had a chance to look around at the site, I’m eagerly awaiting the moment when my system has its first real success: when Inga German writes a review of my system claiming that it’s nothing but hype. Now that’s recognition that means something.
Don’t assume that people with degrees are smarter than people without, or that people with a lot of job experience are smarter than people with less, or that people from an entirely unrelated field can’t outperform the experts in their own field, or that people with real talent have money. If this seems counter-intuitive consider the number of poor high-school students who hack their way into computer systems that even the NSA thinks are secure. The same thing is true of every field, including investing. In the end I’m afraid it’s the acne-ridden, not the meek, who will inherit the earth.
Enough typing for now; I have to go eat part of one of my mutual funds so that I’ll have enough energy to study the bond market tomorrow.
[LINKSYSTEM_65259981]
This forum should have a "like" button.
You should post here more often. That was a great post which was fun to read.
Fred
Good simple question. First of all, I am not Mr. Wall Street. I am a firefighter/paramedic in the St. Louis area with a Bachelor’s degree in Biology and a statistics background. So I don’t have a lot of money by any means. In college I wanted to work for Wall Street but I also wanted to “help people”. Well, now I’m 40 years old with 4 kids and I feel rich if I have $10 in my wallet.
Personally, I have been studying the market every day for 16 years. I have made and lost a ton of money (ton of money to me, being up about $40,000 and then losing it all) in that time. Once I ran out of money for trading, I had to sit on my hands and sit down and really study the markets, study sector rotations, futures correlations, credit markets, etc. I have reached the proverbial glass ceiling in my job so I feel my creative energy being led towards the markets even more.
I am using my trading system in my retirement account, and have been very successful with it there. (however, that doesn’t do me and good day to day). The system was only discovered about 8 months ago, but I have backtested it back to 1985 and it is quite profitable.
So yes, I’m here to sell the signals from my system to make some extra income per month.
Tony
It’s just like running a fund. You can ask the same question: if you trade well, why do you trade other people’s money? It’s just because fund manager wants more money and profit sharing.
I have a high win rate system and it makes good money for me. However I want more money and I don’t want to wait for years to gain more money from the market, so I am selling my system here to people who are interestested in. By selling the system here, I am sharing my system here and I get rewarded. It’s a win win.
Michael,
The condescension and derision with which you and your question have been regarded should be telling in and of itself.
But I suppose we first have to define what we mean by a “good” system. We would all agree “low risk, high return” would qualify - but would Broadsword’s example of a low-yielding system whose risk would be mitigated by selling it at a measly rate of 100/mo qualify? A system w/ 24% annual gain, if it is to be a “good” system, would definitely require very low risk . . . if it is a “risky” system where the trader would actually be BETTER OFF selling it, when then I don’t think that qualifies as a good system at all. Broadsword’s example, however, does illuminate a distinct facet between good and mediocre systems: with mediocre systems, you gain an advantage in selling them, with good systems (and to answer your question) you just wouldn’t sell them.
That is not to say there aren’t any good systems on C2… being sold. They are about as good as it gets in the systems-that-are-for-sale realm. But the better systems - the good ones, the products of real masterminds, which I believe are out there - are not for sale… it would be a downright foolish act to expose such a profound secret.
And if you “truly got the stuff” then capital generation would be a non-issue and NOT acquired by whoring it off at the average (and measly) C2 sub fee.
Take a quick gander here . . . systems with an “astonishing” equity curve do NOT last - and the ones that have lasted… let’s be honest, they are not that impressive are they? Granted, the vendors and the subscribers are making money with those systems, but their low yield and (comparatively) high(er) risk, I believe, disqualifies them from the “so good” systems race.
Also quoting Kevin Davey: “”"“So, let’s say I sold it for $100 a month… I’d get 100100.7 = $7000 per month… Or, I could trade it myself. Trading even 50 contracts… I’d make $50K per month. NO BRAINER on what I’d do…”"""
In reply: THERE IS NO SUCH SYSTEM.
As I’ve implied already–in spirit, I agree with Kevin and Michael–and they are usually partly correct. Yes, I will put “substantial” money in my own systems and I will also compound them “substantially”… But not 100%, more like 30% of net worth…
So I would just like to make one thing clear. I have already said this somewhat, and so have others here, but maybe not totally clearly…
THERE IS NO SUCH THING AS A SURE-FIRE SYSTEM. No matter how intelligent and self-knowing a developer is (which in itself is an unknown factor) no system developer can ever be 100% certain his system will work… And if he is intelligent… he will know better than to bet the farm on his system. Much better to divvy-up the risk with 100 subscribers.
Unless you work at the NSA–or you have a secret line to Wiki Leaks–or perhaps you work for a Chinese spy agency that is tapping into corporate documents–or perhaps you work for a British tabloid that is tapping corporate cell phones…
Hmmm not all that impossible now that I think about it…
Hmmm maybe I better not think about it… 
I disagree with you. You are not selling your system. You are selling the signals. And yes, Goldman Sachs and JP Morgan et al. obviously have proprietary trading that would blow any of us out of the water in terms of performance. But if you have a few hundred million to invest with them to get access to them, be my guest. I think Collective2 is a great idea, and the biggest thing is the numbers speak for themselves.
Krystof Huang said: “THERE IS NO SYSTEM,” referring to a system that I said makes $1,000 per month per contract.
My reply: I’m sorry you believe such a system does not exist.
Kevin
(There are multiple systems I know of, and/or trade, that are even better than this).
Don’t be so sure that just because someone is trading at Goldman Sachs or JP Morgan that he is a better performer. They have access to capital yes, but they usually act as a market makers, and do not risk much.
Just look at LTCM or some of the investment banks that were rescued by FED during last years, and you’ll see that in both cases they were sampling their models on short amount of data (LTCM & banks during last recession). Not to mention the fact that investment banks calculated amount of mortgage defaults in real figures and not in percentages.
[LINKSYSTEM_61470460]
Krystof - you cannot claim that no such system exists. . . firstly, scientifically, and most obviously, you cannot prove a negative. Second, that statement makes you seem naive to those who have experienced unambiguous validation and verification of such systems. All you may claim is "In YOUR experience, you have never observed such a system."
It is telling when a trader makes that statement… and please, I mean no disrespect, but all it means is you have tried to find it and thus far you have not been successful. But that is no grounds in which to determine that the jewels you are seeking do not exist. And again, such systems are NOT for sale, and much less, for your viewing.
Dusan - if someone is trading for GS or JP, it is because they earned their position… they are not some "lucky guy" who was given access to infallible "proprietary software or methodology" where all they have to do is press a few buttons. They ARE the proprietary software and methodology and an illimitable amount of SKILL is required to trade the accounts they do and have access to as much money as they do. Make no mistake - those guys are GOOD.
You all have some good points. I need to modify what I said, perhaps.
I agree with you all that there are probably secret systems that are too good to sell, if that’s what you are saying.
Or if you are saying that someone here at c2 is selling a system that infallibly turns $1,000 into $5,000 monthly, all I can say is, this is certainly the place to prove it. It will show up on my grid and I will subscribe. So you see, I’m not that cynical.
Or if you people who claim to know such systems are not selling them… now that makes sense. All I can say is, after you hit 10 billion, please give at least 1 billion to Greenpeace, Save the Children, or your favorite charity. Give a share back to the earth from where all profit comes. Please do not instead donate one billion to PAC lobbies to reduce taxes for billionaires, as most billionaires do. Otherwise you might have a Lexus in hell, but it will not be air conditioned.
As for Goldman Sachs–if they are so smart, why did they go broke and take government bailouts? Some people say that they give special treatment to multi-billion dollar accounts. And I know that their account minimum is at least 5 million, last I checked. But I believe that their accounts with a paltry 25 million certainly do not get any better advice than can be done subscribing to Motley Fool Stock Advisor. There are thousands of mutual funds and private management firms run by PhD’s. Except for bond funds, they all did terribly. I know, I looked. Meanwhile, Motley Fool did not do too badly at all. That’s how I began on the road to inventing my own systems.
These fund managers are paid at least 1 million per year. If there is any of those Goldman Sachs type experts who is holding something back, he would only need “not” to hold back 10% of his special insights, to create the most powerful hedge fund on the planet. Imagine if Bernie Madoff’s returns were not invented, but real. There is no sense in implying that anyone who runs any kind of institution would not want that kind of performance. I repeat: maybe they don’t give all their knowledge to the little guy, but they certainly would give a little bit, if they had it, to make some mutual funds or money managers look halfway decent. Nope, doesn’t happen. I’ve got piles of their portfolios here to prove it. They want 1% or even 3% of your account every year, rain or shine, and don’t know squat.
Finally, if anyone here is implying that he has a way to turn $1,000 into $5,000 every month, then I strongly advise he keep it to himself. If you publish a system with that kind of returns, other people will figure out what you are doing. And then it will stop working. Money does not appear from the air. For every winner who buys low and sells high, there must be a loser who sold at the wrong time. So whatever your system is, it will surely stop working the moment that too many people know about it.
Do you people know your math? Or are you like 9/10 members of Amway or other MLM fans, who believe things like everyone can be rich forever if they just sign up? That is the average person.
I am not passing judgment here. I do not know any of you. But I do know the average person. If you know your math, then you know that you are not the average person, and you know what I am talking about. If you have ever played Blackjack, then you also know that you can make all the right moves, and end up losing that day, while the next person is making all the wrong moves, and ends up winning. It’s not the average, but the average doesn’t always happen. Also, unlike the average person who wants to punch you in the eye thinking that your “wrong” move in Blackjack caused him to lose, you know that nothing he does will affect your average. Is this you? I hope so.
In any case, thank you for the clarifications. Best of luck to you.
Very well said - every bit.
Maybe I should clarify about large portfolio traders - not just anyone could do it, given enough money and the right software. . . you ain’t gotta be that smart to throw a football, but you gotta be GOOD and consistent. It would seem those companies/asset managers put themselves in position to profit off of regulation, which inflated the value of certain assets and securities, instead of honest asset management (“gee, the net gain off of the outstanding sub-primes this company wrote looks REALLY good, I just KNOW it will all get paid back.”) None too bright at all, I’ll give you that.
1k - 5k monthly? You’re damn right you keep that to yourself. Having that kind of knowledge would actually be dangerous. And no, you will NEVER see a system like that sold here on C2 (that lasts.) I do not “know” such systems, but I have witnessed, in the least, some amazing account performances which did nothing to me but instill a sense of humility.
@ Gnosis Daydream
"Dusan - if someone is trading for GS or JP, it is because they earned their position… they are not some “lucky guy” who was given access to infallible “proprietary software or methodology” where all they have to do is press a few buttons. They ARE the proprietary software and methodology and an illimitable amount of SKILL is required to trade the accounts they do and have access to as much money as they do. Make no mistake - those guys are GOOD."
“They are not some lucky guy”? Take a look at this guy: http://www.minyanville.com/special-features/articles/Todd-Harrison-memoirs-of-a-minyan/6/23/2010/id/23134
and you’ll see that when he got to JP Morgan he didn’t have a clue! As I said they act as market makers and that’s a place where you and I cannot compete, because of their technology and exchange co-located servers but also because they have unlimited amount of money, as they creating it.
For example, one of the best Enron traders made $750 millions in one year for the firm, and got a compensation of $8 millions only. Why if HE (not technology) was so good, he didn’t resign and continue to trade for himself?
I know the reason why.
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I think one reason is the system developers do not have enough money to trade their systems so they go out looking for money. It is like venture capital. Someone gets good business idea but he/she does not have enough money to start with, so they go out to get ventual capital. Sure, other system developers can have different reasons.
People aren’t “selling” their systems here. You have subscribers who are “following” you. There’s a huge difference.
Larry Williams actually teaches people how to trade. You sit through his classes/seminars, learn, and then trade your own real money. C2 is simply a signal provider… subscribers are simply following your trades.
So who would you follow? Someone who is trading on a demo account or someone who has their neck on the line, like you? There’s a big difference between trading demo and live.
I can name too many systems on here that show incredible monthly returns… but after a while, they either blow up or have terrifying drawdowns. Who needs money management when its fake money? I bet all of these systems were traded on demo accounts. Either the developer held the position forever hoping it comes back or they keep averaging down. Anyone who was following these systems either blew up or got a margin call(s)… .some systems you would have blown up several times. Individual trades going 30, 40, 50%+ drawdowns… some even going over 100%+ drawdowns on a single trade!
“”"“I can name too many systems on here that show incredible monthly returns… but after a while, they either blow up or have terrifying drawdowns. Who needs money management when its fake money? I bet all of these systems were traded on demo accounts.”"""
Good point. So far, I have focused on reasons for not trading a ‘good’ system. But of course, it also can be simply a less-than-good system.
I.e. Why trade your own system, when you are not sure about the long term viability of that system, but are sure about its ability to bilk money out of subscribers? C2 guards against this practice by displaying every “canceled” system as well as current system.
This can unfairly prejudice against developers who did a few experiments or the earlier system just wasn’t earning enough for one year to be popular. The creator of S&P ETF TIMER has created 12 failed systems. But I believe he is quite dedicated and (up to Sep 2011) has got it very right with [LINKSYSTEM_46439436].
But as a general rule, there are always dozens of newbies who believe they have a great system, but don’t. Their sixth sense or their spouse’s frying pan just correctly tells them not to put in their own money.
