Dynamic Position Sizing Algorithm for Trend Following

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Dynamic Position Sizing Algorithm for Trend Following

Inspired by a conversation on:

Top Traders Unplugged

Top Traders Unplugged

SI240: Trend Following... More Than Just Vol Scaling? ft. Nick Baltas

Host: Niels Kaastrup-Larsen

Timestamp: 57:06 - 01:00:28

Listen to Episode • View Podcast • All Ideas from Top Traders Unplugged

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Feather Flow

Direct Quote

"We owe that to investors. And, and also I think what's, what, what has been really smart about taking an academic approach."

Market Gap

Investors lack sophisticated tools for dynamic position sizing.

Dynamic position sizing is a critical component of successful trend following strategies, allowing traders to adjust their exposure based on market conditions and volatility. However, many investors still use static position sizing methods, which can lead to suboptimal performance and increased risk. The lack of sophisticated algorithms and tools to help automate this process means that traders may miss out on potential profits or face unnecessary losses. This gap in the market creates an opportunity for a dynamic position sizing solution that adapts to changing market environments, enhances risk management, and ultimately improves trading outcomes.

Summary

This business idea involves developing a Dynamic Position Sizing Algorithm specifically for trend following strategies. This algorithm would analyze real-time market data, historical volatility, and other relevant indicators to determine optimal position sizes for each trade. Users would benefit from a systematic approach that minimizes risk while maximizing potential gains. The target audience would include individual traders, hedge funds, and asset managers seeking to enhance their trend following performance. The platform could integrate with existing trading software, providing seamless implementation. Features could include backtesting, risk management alerts, and customizable parameters to suit different trading styles.

Categorization

Business Model
SaaS
Target Founder
Technical
Difficulty
High
Time to Revenue
6-12 months
Initial Investment
$1,000-$10,000

Scores

Clarity
8/10
Novelty
7/10
Feasibility
6/10
Market Potential
8/10
Evidence
7/10
Overall
7/10
Found on September 10, 2025 • Analyzed on October 10, 2023 12:00 PM

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How should I validate this saas idea before building it?

2:34 PM

Great question! For a saas idea like this, I'd recommend starting with these validation steps:

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  2. MVP approach: Build a simple landing page to test demand
  3. Competitor analysis: Research existing solutions and identify gaps

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2:35 PM

Yes, and what about the technical implementation? Should I build this myself or hire a team?

2:36 PM

Based on your idea's complexity and 6-12 months, here's my recommendation:

Technical Strategy:

  • Start with no-code tools for rapid prototyping
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Similar Ideas

Trend Following Strategy Optimization Tool

The proposed business idea is to develop a Trend Following Strategy Optimization Tool designed specifically for investors and fund managers who employ trend following strategies. This tool would utilize advanced algorithms to analyze historical market data, identify optimal entry and exit points, and adapt to changing market conditions. By incorporating features such as volatility scaling and dynamic position sizing, users can ensure their strategies remain robust against market fluctuations. The target audience would include hedge funds, asset managers, and individual investors who aim to enhance their trend following performance. Key features could include backtesting capabilities, real-time signal processing, and risk management tools.