Quality Money Management : Process Engineering and Best Practices for Systematic Trading and Investment

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3. Competitive advantage


4. Performance forecasts
   C. Product team
   II. Market analysis
   A. Target market
   B. Distribution and marketing channels
   C. History of investment cycles
   D. Competition
   III. Request seed capital
   A. Projected revenues
   B. Estimated development costs
   C. Data and technological infrastructure requirements
   D. Preliminary time line
   E. Risks, constraints, and assumptions

6.1. Business Description

6.1.1. Introduction

By way of introduction, the Money Document will include three names: the name of the

trading system (preferably one that is descriptive of the goal of the system), the name of

the firm, and the name of the product team. These names will clarify communications

and focus all stakeholders on a singular project and purpose. (When naming these three,

we recommend keeping in mind the key buying motivations the project is targeting.)

The introduction should also provide an executive summary as to why seed capital pro-

viders should consider seeding the proposed trading/investment system development project.

For example, the new system may accomplish market or strategy diversification, product line

expansion, or take advantage of new opportunities from regulatory changes or a shifting

economic environment.

6.1.2. Description of the Trading System

The description section of the Money Document should describe in layman ’ s terms the

trading/investment strategy, again without using overly complex mathematical or tech-

nological terms. Nevertheless, creating the perception of scientific rigor is an important

sales tool. Investors prefer quantitative research and methods over fundamental logic

because of the greater objectivity. This objectivity allows the product team to describe

the design, research, and development as scientific, where fundamental methods would

otherwise be questioned.^5

In the business world, seed capital investors absolutely require clearly defined busi-

ness goals prior to contributing capital. During the design stage, goals can drift and scope

can creep if not bounded by written and well-understood documentation. In the trading

world, this is often not the case when evaluating new, proprietary ideas. Often, simple

Excel models are used to prove strategies without ever writing a business plan. While

6.1. BUSINESS DESCRIPTION