📊 #6 Arbiter Trading
Algorithmic Trading Meta-Framework
Bootstrap Score: 78/100 | Status: Framework Built, Needs Strategy Development
Opportunity Snapshot
| Revenue Potential | $36K-60K Year 1 (5-10% monthly returns on $60K-100K capital) |
| Time to First $ | 60-90 days (backtesting + paper trading required) |
| Customer Acquisition | ⭐ SELF (trading with own capital) |
| Investment Required | $10K-25K (trading capital) |
| Status | ✅ Framework built, needs strategy development |
| Risk Level | 🔴 HIGH (trading risk, capital at stake) |
The Opportunity
Algorithmic trading can generate consistent returns (5-10% monthly) through systematic execution of proven strategies. Remove emotion, execute with precision, compound gains.
What You Have:
- Arbiter Framework (Python meta-framework for algorithmic trading)
- Options strategy focus (theta decay, credit spreads, iron condors)
- Backtesting infrastructure (historical data analysis)
- Risk management system (position sizing, stop losses)
- Trade automation (API integration ready)
Why This Could Win:
- ✅ Framework built (technical foundation complete)
- ✅ Options strategies proven (theta decay, probability-based)
- ✅ Automated execution (removes emotion)
- ✅ Compounding returns (5-10% monthly = 60-120% annually)
- ✅ Infrastructure background (systems thinking advantage)
- ⚠️ Requires capital ($10K-25K minimum)
- ⚠️ High risk (trading losses possible)
Revenue Streams (Prioritized)
1. Personal Trading (Self-Funded) 🔥 (Primary)
Revenue: $36K-60K in Year 1 (on $60K-100K capital) Investment: $10K-25K (trading capital)
What: Trade with own capital using algorithmic strategies
Target Returns:
- Conservative: 5% monthly = 60% annually
- Moderate: 7% monthly = 84% annually
- Optimistic: 10% monthly = 120% annually
Year 1 Projection (starting with $60K):
- Month 1: $60K → $63K (+$3K)
- Month 6: $60K → $85K (+$25K)
- Month 12: $60K → $96K (+$36K)
Why #1: No customer acquisition, full control, compound own capital
2. Managed Accounts (Month 6+)
Revenue: $10K-$30K in Year 1 (management fees) Investment: $5K (legal, compliance)
What: Manage trading accounts for others (2-and-20 model)
Pricing:
- Management fee: 2% AUM annually
- Performance fee: 20% of profits
Year 1 Projection:
- Manage $500K-$1M for friends/family
- Management fees: $10K-$20K
- Performance fees (if 30% return): $30K-$60K × 20% = $6K-$12K
- Total: $16K-$32K
Why later: Requires proven track record (6-12 months), legal setup
3. Strategy Licensing (Month 12+)
Revenue: $5K-$15K in Year 1 Investment: $2K (platform, marketing)
What: License proven strategies to other traders
Pricing: $99-$299/month for strategy access + signals
Target: 10-30 subscribers by Year 1
Market Validation
Why Algorithmic Trading Works
- Remove emotion: No fear/greed affecting decisions
- Systematic execution: Consistent application of proven strategies
- Backtesting: Validate strategies before risking capital
- Risk management: Defined rules for position sizing and stop losses
- Probability-based: Options strategies with statistical edge
Options Strategies (Focus Areas)
1. Theta Decay (Time Decay)
- Sell options to collect premium as they decay
- Win rate: 60-70% (probability of profit)
- Risk: Unlimited (need tight risk management)
2. Credit Spreads
- Defined-risk options strategy
- Win rate: 65-75%
- Risk: Limited to spread width
3. Iron Condors
- Neutral strategy for sideways markets
- Win rate: 60-70%
- Risk: Defined, limited to spread width
The Gap (What’s Missing)
| Framework | Strategy Development |
|---|---|
| ✅ 80% Complete | ❌ 20% Complete |
Technical Framework: Built and functional
What’s Missing:
- ⚠️ Strategy backtesting incomplete (need 12-24 months historical validation)
- ⚠️ Paper trading required (3-6 months before live capital)
- ⚠️ Risk parameters need refinement
- ⚠️ Market regime detection (bull/bear/sideways adaptation)
- ⚠️ Options broker API integration (Interactive Brokers, TD Ameritrade)
This is NOT a partnership opportunity: Trading requires personal capital and risk tolerance. This is a solo execution path.
Action Plan
Ready to start this week (research and backtesting phase):
Day 1-2: Strategy Research
- Research proven options strategies (theta decay, credit spreads)
- Analyze historical performance data
- Identify market conditions for each strategy
- Document strategy parameters
Day 3-4: Backtesting Setup
- Setup historical options data source
- Implement first strategy in Arbiter framework
- Run backtests on 12-24 months of data
- Analyze results (win rate, max drawdown, Sharpe ratio)
Day 5: Paper Trading Preparation
- Setup paper trading account (TD Ameritrade, Interactive Brokers)
- Configure Arbiter for paper trading mode
- Define risk parameters (max position size, stop losses)
- Create monitoring dashboard
Week 2+: Paper Trading
- Begin paper trading with first strategy
- Monitor performance daily
- Refine strategy based on results
- Goal: 3-6 months paper trading before live capital
Revenue Trajectory
Month 1-3: Backtesting & Validation
- Complete backtesting on 3-5 strategies
- Identify top 2 strategies for paper trading
- Setup paper trading infrastructure
- Revenue: $0 (research phase)
Month 3-6: Paper Trading
- Execute strategies with paper money
- Monitor performance, refine parameters
- Build confidence in strategy execution
- Revenue: $0 (validation phase)
Month 6-9: Live Trading (Small Capital)
- Start with $10K-$20K live capital
- Conservative position sizing (2-5% per trade)
- Monitor actual performance vs paper trading
- Revenue: $3K-$10K (on $10K-$20K capital)
Month 9-12: Scale Capital
- Increase capital to $60K-$100K (if performance validates)
- Maintain 5-10% monthly return target
- Begin conversations for managed accounts
- Revenue: $15K-$30K (on $60K-$100K capital)
Year 1 Total: $18K-$40K (conservative, accounting for ramp-up)
Why NOT a Partnership Opportunity
This is a Solo Path
Reasons:
- Capital risk: Can’t risk partner’s capital (too much responsibility)
- Emotional discipline: Trading requires personal conviction
- Time commitment: Daily monitoring, decision-making
- Regulatory complexity: Managing others’ money requires SEC registration
- Learning curve: Need to internalize strategies, can’t delegate
Partnership makes sense later: After 12-24 months of proven returns, could:
- Raise capital for larger fund
- License strategies to others
- Build SaaS platform for retail traders
- But NOT in Year 1
Production Validation
Framework exists, strategy validation needed:
Arbiter Framework ✅
- Python-based meta-framework
- Modular strategy architecture
- Backtesting infrastructure
- Risk management system
- Trade execution automation ready
- Position tracking and reporting
What’s NOT Validated ⚠️
- Strategy performance (paper trading needed)
- Risk parameters (need real market testing)
- Market regime adaptation (bull/bear/sideways)
- Execution quality (slippage, fills)
Investment Required
Moderate capital ($10K-25K):
- Trading capital: $10K-$25K (starts small, scales with performance)
- Data subscriptions: $100-300/month (historical + real-time options data)
- Broker fees: $0-10/trade (options commissions)
- Tools: $200/month (charting, analysis software)
- Education: $1K-3K (options trading courses, books)
ROI: 5-10% monthly returns = 60-120% annually (if strategies work)
Risk Assessment
HIGH RISK 🔴
Trading Risks:
- ⚠️ Capital loss (strategies may not work live)
- ⚠️ Market volatility (2020-style crashes)
- ⚠️ Execution risk (slippage, bad fills)
- ⚠️ Psychological pressure (watching capital fluctuate)
- ⚠️ Time commitment (daily monitoring required)
Mitigation Strategies 🛡️
1. Extensive Backtesting
- 12-24 months historical data
- Multiple market conditions (bull, bear, sideways)
- Monte Carlo simulation (stress testing)
2. Paper Trading First
- 3-6 months before live capital
- Validate strategy execution
- Build psychological confidence
3. Conservative Position Sizing
- Start with 2-5% per trade
- Increase as confidence builds
- Never risk more than 10% on single position
4. Stop Losses and Risk Management
- Defined exit rules for every trade
- Max drawdown limits (e.g., stop trading if down 20%)
- Daily P&L tracking
5. Start Small, Scale Slowly
- Begin with $10K-$20K
- Only scale after 6+ months of consistent performance
- Don’t over-leverage early
Why This is #7
Ranked #7 in Top 10 because:
- ✅ Framework built (technical foundation complete)
- ✅ High return potential (5-10% monthly = 60-120% annually)
- ✅ Automated execution (removes emotion)
- 🔴 HIGH RISK (capital at stake, trading losses possible)
- ⚠️ Requires capital ($10K-25K minimum)
- ⚠️ Not a partnership (solo execution path)
- ⚠️ Long validation time (3-6 months paper trading required)
- ⚠️ No immediate revenue (research phase is $0)
This is a high-risk, high-reward solo opportunity requiring capital and discipline.
Critical Disclaimer
⚠️ IMPORTANT: Trading involves substantial risk of loss. Past performance does not guarantee future results. Only trade with capital you can afford to lose. This is NOT financial advice.
Not Suitable If:
- You can’t afford to lose the trading capital
- You need immediate income (takes 60-90+ days)
- You want a partnership (this is solo)
- You lack emotional discipline for trading
Could Be Suitable If:
- You have risk capital available ($10K-25K)
- You’re disciplined and systematic
- You can handle daily volatility without panic
- You’re willing to paper trade for 3-6 months first
- You understand trading risk
Next Steps
If interested in pursuing this opportunity:
1. Education First (Month 1-2)
- Read: “Options as a Strategic Investment” by Lawrence McMillan
- Study: Theta decay, credit spreads, iron condors
- Practice: Paper trading on TD Ameritrade or Interactive Brokers
- Learn: Risk management and position sizing
2. Backtesting (Month 2-4)
- Implement strategies in Arbiter framework
- Run 12-24 months of historical backtests
- Analyze results (Sharpe ratio, max drawdown, win rate)
- Refine parameters for optimal risk/reward
3. Paper Trading (Month 4-9)
- Execute strategies with paper money (3-6 months minimum)
- Track every trade, analyze mistakes
- Build psychological confidence
- Validate strategy performance
4. Live Trading (Month 9+)
- Start with small capital ($10K-$20K)
- Conservative position sizing (2-5% per trade)
- Monitor performance vs paper trading
- Scale only after consistent performance
This opportunity requires patience, discipline, and capital. Recommended only if you have risk tolerance and long-term view.