In Step 9, a placement agent will help you identify the best opportunities to profit with your trading robot. Your robot can work for proprietary trading firms, institutional investors, accredited investors, and investment clubs. The ultimate goal of this step is to help you get money to manage using your robot. In other words, the placement agent will work to help find your trading robot "a job".
Note: In some cases you may need to acquire licenses from the Security and Exchange Commission.
Once your robot is in use, it can handle more investment capital. By managing more assets, you can increase your annual profit.
Since many people desire to make money from money, there are countless places that are looking for profitable trading robots. However, the task of finding the right place is not easy. It must meet the following criteria:
Trade all stocks and ETFs (including penny stocks under $1)
Ideally, the place needs to offer access to all of the stock and ETF symbols. Some places will only allow the trading of futures, forex, or commodities.
Use an automated API that does not require human interaction
Many places require the use of trading platforms that run on your home computer. The trading platforms require a human user to sit and look at boring charts and place trades manually. Over the course of a year, that can mean over 1600 hours a year (50 weeks X 5 days X 6.5 hours) trading! It's no wonder that 75% of the capital traded each day is handled by automated systems.
Connect to the API with an open protocol like REST, SOAP, FIX
Your trading robot can be developed to communicate with other computers using the REST, SOAP, or FIX protocols. A good place will use standard protocols and should have their API documentation available to the public.
Avoid all leverage (including Forex, options, Futures, etc)
Some places force traders to use leverage. Your robot is designed to avoid using leverage so we will help you find a place that does not require it.
Send signals with no minimum trading frequency requirement
Some places force traders to make a lot of trades. That is because they make money by charging a fee for each trade. If you do not trade enough, they charge a penalty. That can cause traders to overtrade (churn) their account to losses. We will help you find a place that does not have this requirement.
Hold positions overnight
Another tactic for forcing traders to overtrade is by forcing the trader to close all their open positions at the end of the trading day. This policy can unnecessarily lock in losses (and does not truly diminish risk).
Avoid paying an initial cash contribution
Our placement agent will also look for places that do not require a high cash contribution. Some proprietary trading firms require you to deposit thousands of dollars. However, there are good opportunities where there is a cash contribution, but the proprietary trading firm also contributes a lot more money.
Start without providing a detailed trading track record
Initially, your robot will not have a trading track record with real money. Therefore, we will identify places that do not require it.
Avoid paying for training
Some places require that you pay for a training course. We will identify the places that do not require you to pay for training since your trading robot will already be fully trained and handling all of the trades.
Identify Proprietary Trading Firms
Proprietary trading (also “prop trading”) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money, as opposed to depositors' money, so as to make a profit for itself. Proprietary traders may use a variety of strategies such as index arbitrage, statistical arbitrage, merger arbitrage, fundamental analysis, volatility arbitrage or global macro trading, much like a hedge fund. All proprietary traders must be registered with a proprietary trading firm and are required to obtain either the Series 57 (Limited-Proprietary Trader).
Identify Institutional Investors
An institutional investor is a term for entities which pool money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include banks, insurance companies, pensions, hedge funds, investment advisors, endowments, and mutual funds. Operating companies which invest excess capital in these types of assets may also be included in the term.
During the research and development process, your robot will be recommended to institutional investors if the performance is high enough. Our placement agent can also help your trading robot get exposure.
Identify Accredited Investors
An accredited or sophisticated investor is an investor with a special status under financial regulation laws. In the United States, to be considered an accredited investor, one must have a net worth of at least one million US dollars, excluding the value of one’s primary residence, or have income at least $200,000 each year for the last two years (or $300,000 combined income if married) and have the expectation to make the same amount this year.
The assumption underlying accreditation is that individuals or organizations who qualify will have sufficient financial sophistication to understand and take on the risks associated with certain investment offerings. Laws may require that some types of financial offerings may only be made to accredited investors.
Use Investment Clubs (Georgia or Kansas)
The Invest Georgia Exemption, which makes it legal for non-accredited investors to make intrastate investments (Georgia resident investing in a Georgia company) through crowdfunding.
Use Your Private Capital
Of course, you can always use your trading robot to manage your own money. However, having additional assets under management will increase your net profit per year.
Avoid Advertising Restrictions
Some placements add additional restrictions on advertising. For example, if the assets being manage are considered to be a privately offered security, it may prevent posting information to databases or soliciting at conferences. Generally speaking, it is better to have a business model where your robot manages accounts.
Place your Trading Robot
StepsTeam views fundraising as an ongoing effort. To achieve near-term goals and position clients for long-term investor relationships, we play an active role during all points in the fundraising cycle.
We conduct in-depth due diligence during Steps 1 - 8, among many other pre-marketing preparations. We advise you on the structure and terms, assist in the preparation of offering and sales presentation materials, identify and qualify investors, identify and produce elements of investor due diligence package. We also develop a marketing timetable and strategy for prospective investors and help improve the final presentation made to investors.
Fundraising / Closing
In the final process of Step 9, we will distribute the Private Placement Memorandum, facilitate the interaction between manager and investors (or proprietary trading firms), schedule meetings, coordinate roadshows and attend manager presentations — all to get your robot a proper job in the workplace. We will provide follow-up information to investors and guide them through due diligence, as well as provide regular marketing updates to managers. Last but not least, we will deliver investor commitments and close each transaction.
When this step is completed, you will receive a report that specifies the places that the placement agent reviewed for your robot. And the full due diligence documents. With a successful placement, you will also receive all documentation and contact information required to work with the place. The ultimate aim for Step 9 is to get your trading robot investment capital to manage.