Selling an algorithm to a Hedge fund
Hello,
I just wanted to ask some general questions about potentially selling an algorithm to a hedge fund:
1) Assuming I produced results from Jan 1st 2020 to Jan 1st 2023, what would be deemed a good yearly result? Would a 20% yearly gain be good?
2) What kind of drawdowns do most hedge funds work with? What is a reasonable daily drawdown? What is a reasonable absolute drawdown?
3) Do things like Sharpe Ratio and Z Score play a big factor?
4) If anyone has sold any algorithms already - be it a hedge fund or any other company - what kind of compensation can you expect to receive?
Any thoughts? I understand these are very general questions, and perhaps most people wont have an answer, but I am open to any insights!
I have sold an algorithm to a HNI Client, and the drawdown is more important from the return, If money is made safely then its important, my client strictly said to avoid use of any method like martingale, averaging or pyramiding and wanted something which works on 4 hour or higher timeframe and was OK with 2 to 3 trades per month. I would say Sharp ration and Z score is most important to be within limit. My client was a forex trader but i said the deal only happens if he prefer to run this EA on Gold and he accepted so the deal was done and i got paid after showing him complete result on testing with his brokerage calculation too. Since there is some issues on adding brokerage on testing i faced on mt5 so i also published a program on codebase which name is Ontester Commission calculator.
Hello,
I just wanted to ask some general questions about potentially selling an algorithm to a hedge fund:
1) Assuming I produced results from Jan 1st 2020 to Jan 1st 2023, what would be deemed a good yearly result? Would a 20% yearly gain be good?
2) What kind of drawdowns do most hedge funds work with? What is a reasonable daily drawdown? What is a reasonable absolute drawdown?
3) Do things like Sharpe Ratio and Z Score play a big factor?
4) If anyone has sold any algorithms already - be it a hedge fund or any other company - what kind of compensation can you expect to receive?
Any thoughts? I understand these are very general questions, and perhaps most people wont have an answer, but I am open to any insights!
I agree with your statement that they are outspaced by SP500
I believe the most important factors they see are high volume and good liquiduty
Here is an article which explains why algo traders are moving away from unreliable markets like BSE where neither data is provided with accuracy nor there is liquidity in market to study charts. They prefer algos to be deployed in sp500 or Gold which is worlwide highest traded commodity
I agree with your statement that they are outspaced by SP500
I believe the most important factors they see are high volume and good liquiduty
Here is an article which explains why algo traders are moving away from unreliable markets like BSE where neither data is provided with accuracy nor there is liquidity in market to study charts. They prefer algos to be deployed in sp500 or Gold which is worlwide highest traded commodity
Hello,
My strategy is deployable on S&P and Gold, however, all backtesting has been done on Gold at the moment.
Currently, I am getting some results for a 3 year back test, but I also did a 1 year test as well.
The tick quality of the test was 100%. As you have sold an algo before, are these results good? It took me a long time to get to this point and I feel as if I have pushed the algo as far as I can, so it would be nice to get an outsider perspective:
I have sold an algorithm to a HNI Client, and the drawdown is more important from the return, If money is made safely then its important, my client strictly said to avoid use of any method like martingale, averaging or pyramiding and wanted something which works on 4 hour or higher timeframe and was OK with 2 to 3 trades per month. I would say Sharp ration and Z score is most important to be within limit. My client was a forex trader but i said the deal only happens if he prefer to run this EA on Gold and he accepted so the deal was done and i got paid after showing him complete result on testing with his brokerage calculation too. Since there is some issues on adding brokerage on testing i faced on mt5 so i also published a program on codebase which name is Ontester Commission calculator.
Could you please provide a link to this:
Ontester Commission calculator.
Thank you for your responses so far, I have found them helpful!
Could you please provide a link to this:
Ontester Commission calculator.
Thank you for your responses so far, I have found them helpful!
I am unable to provide you link because it may get deleted or considered spam or marketing by moderators as earlier these have been deleted too.
You an do a search and you will find it.
I am unable to provide you link because it may get deleted or considered spam or marketing by moderators as earlier these have been deleted too.
You an do a search and you will find it.
Okay no worries.
In regards to the back test result I attached to my earlier message, would that be good enough performance? Or do they expect more?
This discussion should stop (or at least remove screenshots of back-tests and results).
Here on the forum, you should only discuss things in general and without specific back test results as that can be considered self-promotion or advertising.
Discussing specific trading systems or EAs in the forum should be accompanied with source code. If you are not willing to do that, then do your own research or post it in your blog, not here.
Also, you are "dreaming" if you think you are going to sell your strategy to some financial company without any real trading track-record. Relying only on back-tests is meaningless.
If you believe your strategy is good enough, then trade with it on a real account (e.g. prop-firm account). Prove it too yourself. Stop "dreaming" and make it a reality.
- www.mql5.com
This discussion should stop (or at least remove screenshots of back-tests and results).
Here on the forum, you should only discuss things in general and without specific back test results as that can be considered self-promotion or advertising.
Discussing specific trading systems or EAs in the forum should be accompanied with source code. If you are not willing to do that, then do your own research or post it in your blog, not here.
Also, you are "dreaming" if you think you are going to sell your strategy to some financial company without any real trading track-record. Relying only on back-tests is meaningless.
If you believe your strategy is good enough, then trade with it on a real account (e.g. prop-firm account). Prove it too yourself. Stop "dreaming" and make it a reality.
I've removed the back test results as you have requested.
It's incredible to me that you think I'm "dreaming" when you have no knowledge of my track history or my connections, but I'm not going to debate you or anyone else on the forum.
In the future I will just keep my thoughts to myself; it's clearly too hard to have a respectful conversation in the MT5 forums. What a shame.
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Hello,
I just wanted to ask some general questions about potentially selling an algorithm to a hedge fund:
1) Assuming I produced results from Jan 1st 2020 to Jan 1st 2023, what would be deemed a good yearly result? Would a 20% yearly gain be good?
2) What kind of drawdowns do most hedge funds work with? What is a reasonable daily drawdown? What is a reasonable absolute drawdown?
3) Do things like Sharpe Ratio and Z Score play a big factor?
4) If anyone has sold any algorithms already - be it a hedge fund or any other company - what kind of compensation can you expect to receive?
Any thoughts? I understand these are very general questions, and perhaps most people wont have an answer, but I am open to any insights!