Trading system analysis: Then and now

For a brief time, they tried to market and sell trading systems, but they soon discovered that the real opportunity was in selling non-technical clientele the tools to program and test their own strategies. They released System Writer one week before Black Monday in 1987.

Two features characterized System Writer. The first was that all strategies processed one bar at a time, with offset Bar 0 being the current one. In addition, System Writer didn’t just let traders write their own rules. It allowed them to write their own functions that they could call as often as they liked across all their strategies. This simple feature added an enormous amount of flexibility and scalability to the software. 

Early going was tough for this start-up company, then called Omega Research. Despite the existence of other trading system software, backtesting was still new to many. However, over time the popularity of personal trading system development grew, and for many System Writer was the only viable alternative. 

System Writer Plus was released in 1989, and it was well received. It was much faster than System Writer and incorporated optimization and new charting features in innovative ways. Bruce Babcock of Commodity Trader Consumer Reports (CTCR) was an early fan. Babcock, writing as a contributor to Futures, said this in his 1989 review of System Writer Plus: “System Writer is the system trading software equivalent of putting a man on the moon.”

In 1991, System Writer Plus was reborn as TradeStation. TradeStation added intraday analysis and a real-time element. Now, small traders had a user-friendly way to analyze the markets in real time. 

The next major breakthrough was in 1993. Reuters approached the Cruz brothers to buy them out. Bill and Ralph were enjoying the excitement and growth of their business and said they weren’t interested in selling but that they would license it. Reuters said no. A few years later, Dow Jones Telerate came knocking. Again, Bill and Ralph said “no sale” but that a license would be available. Dow Jones Telerate first balked but then returned to make a deal a year later. They launched TradeStation as a premium service to institutional clients in 1996. Perhaps the first time in the history of trading system software, a major product that was designed with retail clients in mind had “trickled up” to professional traders.

In 1996 Sal Sredni joined the company as vice president of operations. In 1997, Omega Research went public and renamed the company TradeStation. In 1999, TradeStation launched an online version to deliver data over the Internet and, in 2001, TradeStation 6.0 added real-time execution and brought short-term intraday trading off the floor. With retail traders now able to day-trade from their desktops, the fate of pit trading was essentially sealed. Also in 2001, the company launched TradeStation Securities, a stock brokerage firm. The testing, order generation and native execution were fully integrated in 2003 with TradeStation 7.0. Forex analytics followed, and then TradeStation 8.0 added options execution. In 2005, TradeStation became a self-clearing options firm. 

Another aspect that helped grow TradeStation was a third-party solution provider network. Managed by Tuttle, the network featured dozens of professional programmers who expanded the capability of TradeStation and its sister applications. An entire industry grew up around the software, including seminars, publications and user networks. It all contributed to the penetration and success of TradeStation.

The Cruz brothers retired from the company in 2007, and Sredni has taken over as CEO.

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