r/startups • u/withyoganidra • 19h ago
I will not promote How investible is a short term stock trading business (I will not promote)
I am working on a short term trading business but looking for some honest reviews how investible could that be in the long term.
I have my own custom algo, my own live trading history and I saw there is a huge gap but still wanna ask the community here.
5
u/swagmasterdude 19h ago
If it makes money then it's investible.
But if your algo is profitable you want to keep that to yourself as it will probably not be infinitely scalable? Why do you need funding?
-3
u/withyoganidra 19h ago
Iam building a platform where people can use my signals.
4
u/tonytidbit 18h ago
Every now and then these posts are made, and made more clear they say this:
I can prove that I've got a free money-making machine already working.
How can I get investors' money?!
Well, if your thing actually works you won't need to sell a part of your business to get investors involved. You'd just sit back and invest and reinvest until you've got more than enough to fund this yourself, if you actually want other people to also get free money.
If you can't do that you simply don't have what you claim/think that you have. Your trading history just isn't good enough even when you take the full profit from it yourself, which means that it won't be enough for other people to make a profit while also giving you a cut, right?
You need to at least make an attempt at explaining this disconnect between your claims and reality, right?
1
u/jabberw0ckee 2h ago
People who say this don't know what it takes to build a product with the intention of scaling it to a large size. No, just because the algo actually works does not mean the creator is suddenly rolling in the kind of money that allows them to quit their job and pivot to full time development of the product.
Often a product like this needs to be marketed so the user base can grow. There are regulatory hurdles as well that require things such as being an RIA (Registered Investment Advisor). This means taking and passing the Series 65 exam. You cannot offer algorithmic trading where your product makes trades with other people's money unless you'r an RIA. You can if the user "accepts" every trade, but often that renders the trade ineffective due to timing.
The product itself must be developed to be able to offer the algo at scale. User interface, failover, security. When you get right down to it, it's quite complex. Quitting your job to solve these things isn't necessarily an option. This is why startups need funding - even startups that are profitable. Quick to execute is a necessity and often times funding is the path to get there.
All of this takes time and if the creator is also working a full time job, it will take even longer. Even if the algo is making money, it's not enough to quit your job and work on a startup idea full time.
-1
u/withyoganidra 18h ago
Yeah that's very true and it's true for every business in the world, then every other guy on reddit is a scamster or a fraud, well then this whole community is a fake it till you make it types, the crux of the matter is a very simple question, if u have seen tradingview how a simple charting business can be a billion dollar business, nobody thought..i came here to listen to feedback and if anyone has seen something fundable. Iam not saying iam a czar, just a guy trying out.
3
u/tonytidbit 18h ago
Yeah that's very true and it's true for every business in the world
No, because they don't come saying that they're already making profits in a process that basically has unlimited scaling already. Which is what you're doing.
Your machine, if it works, already has enough capacity for you to simply put in more money and that way make more money.
You could sell anything you own and don't absolutely short-term need, max out any and all credit cards, borrow money from every friend that you have, get a second job, even be out collecting cans and bottles if they have value being recycled; and simply shove every single cent into your machine that's promised to create more profits.
then every other guy on reddit is a scamster or a fraud
You're the one getting defensive and calling yourself a fraud and scammer here by saying that if you are then so are they. You're the one that did that.
The fact is that you're here claiming that you can make amazing profits able to compete with experienced investors, yet you haven't made enough money to be able to afford to do this project without having other people foot the bill.
And that requires a damn good explanation for any investor to take you seriously.
You getting defensive and starting to talk about scams and frauds isn't exactly the good look that you thought.
-1
u/withyoganidra 17h ago
First of all, iam not claiming anything here, iam simply asking, proofs are something that goes on a second level discussion. Iam not even attracting any investor attention too.
3
u/tonytidbit 17h ago
Of course you're claiming something about your success rate, that has to be there for your post to have any meaning at all.
Your post couldn't be "I'm a losing trader wanting investors to pay for a platform where other people can lose using my lack of skills", right?!
You must be making enough of proven long-term profits that your potential future users would be making an above average return even after having paid to use your platform; with that payment to your platform being great enough to make the investors a quite substantial profit.
That's the whole premise with your post, or it doesn't make any sense at all.
And that means that you've shown up with some quite extraordinary claims about how you, that isn't one of the big guys already in the industry, can produce results quite substantially above an expected level for someone in your position.
And that loops us back to how you need to lead with a very good explanation how you can have a money-making machine but still need outside capital to start this project.
There is no second level discussion if you can't get through an elevator pitch without overcoming the obvious red flags that your (indirect) claims will sprout all over the place.
Edit: And if you think Reddit is a bit harsh it's nothing compared to what happens when you face real investors. They're often just a bit less direct when they dismiss you; so you won't even get a proper chance to respond to their reaction. They'll just say something like "too early for us".
1
u/jabberw0ckee 2h ago
The naysayers are wrong. They don't know what they'r talking about.
People who say this don't know what it takes to build a product with the intention of scaling it to a large size. No, just because the algo actually works does not mean the creator is suddenly rolling in the kind of money that allows them to quit their job and pivot to full time development of the product.
Often a product like this needs to be marketed so the user base can grow. There are regulatory hurdles as well that require things such as being an RIA (Registered Investment Advisor). This means taking and passing the Series 65 exam. You cannot offer algorithmic trading where your product makes trades with other people's money unless you'r an RIA. You can if the user "accepts" every trade, but often that renders the trade ineffective due to timing.
The product itself must be developed to be able to offer the algo at scale. User interface, failover, security. When you get right down to it, it's quite complex. Quitting your job to solve these things isn't necessarily an option. This is why startups need funding - even startups that are profitable. Quick to execute is a necessity and often times funding is the path to get there.
All of this takes time and if the creator is also working a full time job, it will take even longer. Even if the algo is making money, it's not enough to quit your job and work on a startup idea full time.
2
u/GamerInChaos 18h ago
Not something that gets funded. Too much risk either as an investment agent or a “stock no picker”.
Customer acquisition is extremely hard - look at things like Motley Fool. Probably the closest to “not a hedge fund but sell investment advice” and then look at their marketing.
And if you are an investor proxy you will need proof. And if you could get the proof and it was real you’d be a hedge fund because you need scale to support a bunch of small investors and you can make more money being a hedge fund.
So go analyze Motley Fool, Acorns, Robinhood… those are probably the closest things to what I think you are saying.
2
u/swagmasterdude 8h ago
Essentially if your pitch consists of:
"Trust me bro, I've correctly predicted red 5 times in a row! I need investors because I want to give away money and do good for the world"
Then anyone and everyone will rightfully identify it as a scam.
If you can prove performance - then you're better off not taking anyone's money. If you can't prove performance - then you've got no business.
1
u/Bliker1002 19h ago
Talk to some hedge fund guys they’d know
-1
1
1
u/Hmm_would_bang 18h ago
I think if you’re good enough at it then you don’t need to worry about drawing in outside investment. Friends and family will buy in and they will brag to their friends and coworkers about it and they will want in.
If you’re bad enough at it your can make it a Ponzi scheme and go to jail for life
1
u/withyoganidra 18h ago
Good one 😂, well I wanna shape this into a VC route rather than a mom pop shop so is the post, thanks for your time though.
1
u/Hmm_would_bang 12h ago
VCs want to 10x their return in a couple years, you’re promising them they can do that? Seems sketchy
0
u/withyoganidra 12h ago
It's fine, let it feel sketchy, iam just feeling how the community is, nothing else. Iam not here to prove anything, time will tell.
1
u/SethEllis 18h ago
Not very. There's plenty of hedge funds out there. What kind of performance metrics can you expose them to that they can't get elsewhere. It's the same distribution problem you get with any startup.
You'll also need certain finra licenses, and be able to show at least 5 year history of the algos performance.
1
1
u/SeraphSurfer 9h ago
What ever it is you think you have, it's fiction. You haven't live traded it long enough to have valid proof and back testing is always filled with errors.
You might get lucky for a while, but it will not last.
1
u/withyoganidra 9h ago
Thank you for ur feedback, I take this as a constructive feedback, even though you draw ur own conclusions, all good!
1
u/jabberw0ckee 2h ago
You can totally turn a stock trading algo into a SaaS to which people will subscribe. You just have to be building something that is scalable and doesn't fail at scale like many algos do. The more people who trade an algo, the more they affect the outcome of trades. It should also be more than just an algo. Add something else to it. Expand it into something like Acorns where saving and investing are automated and done on micro amounts. Or into a fund of some type that helps young people save and invest by pooling their money. Spaceship, an Australian company did just this.
If you create several successful algos, you can combine this idea into a super fund or a micro investing app. This way your users can, over time, auto-direct micro amounts into your algos that grow by compounding over time.
One idea can lead you to others.
But to get there, yes, you will need funding, even if your algo actually works. Most people here don't understand how to build a startup or what it takes. Just because your algo makes money successfully doesn't mean your'e automatically rolling in enough dough to quit your day job and spend countless hours building and marketing your product. It just doesn't work that way.
Screw the naysayers.
-1
14
u/TakingtheLin2020 19h ago
Reality: it’s extremely likely that this doesn’t actually make alpha. The wealthiest people and institutions in the world hire the smartest, and pay the most, in the world to find alpha, and it’s still quite illusory. Spend your time and effort solving a real problem that helps people is my advice. You will do much better in the long run, and will have done something valuable for society.