Price Value of a good expert advisor

Hi folks

What is the value of an expert advisor?How do we put a value on an expert advisor?What is a good expert advisor?

A good expert advisor is one with a drawdown of 50 % of the yearly pips it makes(averaged out over 3 years).It should have annual pippage of at least 700 pips and a drawdown of 350 pips.

An investor could put 10,000 and expect to make 70 % per year = 700 pips *$10

If an investment in an expert advisor gives an income of 70% ,on a 10,000 account (the minimum account size used )it would give 10 times the annual interest income of say 7% =70%.In my view the expert advisor is worth 10 times * 10,000 * 0.5 (annual drawdown) = $50,000.

A really good expert advisor making $250,000 from a $10,000 account is worth around $1.8 m

Could anybody else come up with a formula for putting a value on expert advisors

OILFXPRO

In my view they are all almost worthless. They don't do anything that has not been done for years by the likes of Tradestation etc and it was easy to come up with any number of systems that would give huge profits. I even posted one on here that would return $4.2M for a starting account of just $10K over about 4 years or so. All that has happened is that in recent times the ability for others to jump on this bandwagon has become far more widespread but nothing has really changed in the overall value or usefulness of any of these EA. The problem with anything like this is that it is all based on history and we all know that the future cannot be assumed to be reflective of the past. Also many of the so called profits that are being claimed are in reality untradeable in the real world.

Personally I wouldn't pay anything for any of them.


Paul

Paul

One could write an expert advisor system which is more probabilistic and thinks like the trader.One could write every set of rule the trader uses and get the expert advisor to think like the trader

It would save the trader a lot of time monitoring the markets ,so there is some value

One of the disadvantages is the inability of expert advisors to trade the latest news as an input to the trading strategy.A probabilistic expert advisor could possibly overcome this disadvantage

I would not pay any money for the expert advisors currently sold,they are worthless and most are no better than random entry


OILFXPRO

I certainly wouldn't buy someone elses EA, unless i knew exactly what the strategy rules were and that they were robust.
I'd only be comfortable producing an EA/ELD etc. if i had designed the rules that were to be coded.
You see some EA's for sale on ebay, with a profit factor of 6 etc. But often, these rfesults are based on only about 40 trades. Of course, the code is always locked, so it is a black-box system. . But some unknowledgeable poor souls are likely to buy such crap.

They are worth whatever the market is prepared to pay, which isn't a lot, for a whole bunch of reasons.

for a start who would want to trade with any metatrader based broker ?

Although in theory, your EA might turn 10K into 43 Million, if someone only has 10K to invest, then in all likelihood they don't have the money to pay your theoretical price up front for the product.

The main reason why they aren't worth anything is that practically anyone with the analytical skills to figure out a trading methodology can write code, thats the easiest part of the problem to solve, a chimpanzee could do it. Writing a few thousand lines of source code really is a walk in the park, and the very least of the problems needed to be overcome.

There's a whole bunch of other reasons why people wouldn't want the technical problems associated with running an automated solution, and if your going to abdicate responsibility for your trading decisions to someone or something else, your much better trusting a human being with a decent audited track record, rather than a historical back test from a flawed product.

As Ive said before, no one with a reasonable product would ever dream of selling it at any price, because there's simply no need to, there are far more efficient, scalable and profitable solutions.

Zupcon

I don't think it is as easy as u make it.

Writing several thousand lines of codes can be done by a chimp as you stated.Writing
profitable probabilistic rules requires a genius and it involves the sort of maths involved in acturial science

Better the championship winner has a degree in maths and physics and he certainly ain't a chimp

OILFXPRO

See additions.

You seam to be confusing the role of programmers and designers. Programmers simply write code, they do not design systems. Developing a strategy isn't a job for a programmer and hell will freeze over before a programmer develops a profitable EA.

Most people with a numerate degree will be capable of coding, it really isn't in the least bit difficult.