218 CHAPTER ◆ 2 3 Check Performance and Probationary Trade
23.5. User Documentation
The product team includes a marketing person and we recommend the marketing person,
along with the trader, read and write the user documentation and training manuals. These
documents must be well written, describing how the system works, what it is supposed
to accomplish, and how a user can operate the system in step-by-step fashion. By having
a marketing person lead the user documentation process, the team can be confident the
manuals will be written from the perspective of a lay user.
This way, if the trader is unable to run the system, for whatever reason, another member
of the product team can read the user documentation and training manuals and operate
the system properly without any additional assistance or expertise. Of course, this does
not require documentation of proprietary algorithms, which will be kept secret. The other
members of the product team should also review the documentation and manuals for
clarity, correctness, and maintainability. Once the system is in production, product team
members will be too busy running the system or working on other systems to deal with
new additions to the current documentation.
These documents should make the trading/investment system SAS 70 and/or ISO
9000 auditable, since many large firms are starting to invest only in firms that have an
auditable investment method due to the large number of funds that fail for operational
reasons.23.6. Probationary Trading
Once the product team has signed off on all tests, probationary trading can begin.
Probationary trading will find any remaining design flaws in the trading/investment algo-
rithm or the software prior to trading the full investment sum, which will officially begin
the track record period. The second purpose of probationary trading is to allow the traders
time to use the GUI and reporting tools and determine what additional tools they will
need to properly manage the trading/investment system.
This time, when the product team checks performance, they will have real-time, live
trade data to measure. This is the final step in the testing stage of the trading system
life cycle. Following probationary trading is Gate 3, where top management must still
approve trading of investor assets. Placing simulated trades against real-time market data
will give us a true and final test of the potential of a trading system. At this point, the
returns of the system will be similar to those of the final product.23.7. Summary
The product team must be confident that the development team has built the hardware
and software in a quality manner. Quality assurance audits will verify that processes have
been followed and that the software and hardware are built to specification and satisfy
quality attribute requirements. Because the product team is ultimately responsible for the
trading/investment system, the team must conduct planned user acceptance tests before
implementation. The goal of QA is to ensure a trading/investment system will pass an
SAS 70 audit.
Once user acceptance tests are completed and signed, all operational risk should
essentially have been removed. For Loop 4, the team can focus on market risks.