The Build vs Buy Decision

Should you build your own system or use someone else's? Let's do the math.

In the last lesson, you saw the full scope of what goes into a trading signals engine: data pipelines, backtesting frameworks, execution systems, risk management, and monitoring. You now know it takes 7-11 months of focused work and $500-2000/month in ongoing costs.

The question is: should you actually build all of that?

This lesson will give you a framework for making that decision. We will look at real numbers, honest trade-offs, and help you figure out what makes sense for your specific situation.

The True Cost of Building

Let's calculate the real cost of building a signals engine from scratch.

Time Cost

From the previous lesson, we estimated 7-11 months of development time. Let's use 9 months as a middle estimate.

If you are working on this part-time (20 hours/week), that is:

•9 months × 4 weeks × 20 hours = 720 hours

If you are working full-time (40 hours/week):

•9 months × 4 weeks × 40 hours = 1,440 hours

Now, what is your time worth? This varies dramatically by person:

Hourly Value	Part-Time Cost	Full-Time Cost
$25/hour	$18,000	$36,000
$50/hour	$36,000	$72,000
$100/hour	$72,000	$144,000
$200/hour	$144,000	$288,000

Most people underestimate their hourly value. If you have a job paying $100K/year, your effective hourly rate is about $50/hour. If you could freelance or consult, it might be higher.

Cash Cost

Beyond time, there are direct expenses:

During Development (9 months)

•Cloud infrastructure: $100/month × 9 = $900
•Data subscriptions: $300/month × 9 = $2,700
•Tools and services: $50/month × 9 = $450
•Development subtotal: $4,050

Ongoing Operations (per year)

•Cloud infrastructure: $200/month × 12 = $2,400
•Data subscriptions: $600/month × 12 = $7,200
•Monitoring and tools: $100/month × 12 = $1,200
•Annual operations: $10,800

Hidden Costs

These are the costs people forget:

Learning curve mistakes. You will make errors during development. Some will cost money directly (bad trades during testing). Some will cost time (rebuilding systems that do not work).

Maintenance burden. Software does not stay working by itself. APIs change. Libraries update. Bugs appear. Plan for 5-10 hours per week of ongoing maintenance.

Opportunity cost of delayed trading. While you are building, you are not trading. If your system would generate 20% annual returns on $50K, that is $10K/year you are not making during the 9-month development period.

Total Cost of Building

Let's add it up for someone with a $50/hour time value, working part-time:

Category	Cost
Development time (720 hours × $50)	$36,000
Development cash costs	$4,050
First year operations	$10,800
Total Year 1	$50,850

And that assumes everything goes smoothly. Most first attempts do not.

The True Cost of Buying/Subscribing

Now let's look at the alternative: using existing tools or subscribing to signals.

Option A: Open-Source Frameworks

Tools like Freqtrade, Jesse, or Hummingbot are free to use.

Costs:

•Learning curve: 40-80 hours to become proficient
•Customization: 100-200 hours to adapt to your needs
•Infrastructure: $50-200/month for hosting
•Data: $0-300/month depending on needs

Total first year: $2,000-8,000 + 150-300 hours of time

Pros:

•Much faster to start
•Community support
•Proven, battle-tested code

Cons:

•Limited to framework capabilities
•Less flexibility for custom strategies
•Still requires technical skills

Option B: Signal Subscription Services

Services that provide trading signals you can follow or auto-execute.

Costs:

•Subscription: $50-500/month
•Execution platform (if needed): $0-100/month

Total first year: $600-7,200

Pros:

•Immediate start
•No technical skills required
•Someone else handles infrastructure

Cons:

•Dependent on signal quality
•Less control over strategy
•Ongoing cost regardless of profitability

Option C: Hybrid Approach

Use existing infrastructure for commodity components, build custom only where you have edge.

Example setup:

•Use TradingView for charting and alerts: $15-60/month
•Use exchange APIs directly for execution: $0
•Build custom signal logic only: 100-200 hours
•Use existing data APIs: $100-300/month

Total first year: $2,000-5,000 + 100-200 hours

This is often the sweet spot for serious traders.

The Decision Framework

Here is how to think through the build vs buy decision:

Question 1: What is your edge?

Your edge is where you add value that others cannot easily replicate.

If your edge is in strategy/signals:

•Build your own signal generation
•Use existing infrastructure for everything else
•Your alpha comes from what you trade, not how you trade it

If your edge is in execution:

•Build custom execution systems
•Use existing signals or simple strategies
•Your alpha comes from how you trade, not what you trade

If your edge is in data:

•Build custom data pipelines
•Use existing frameworks for everything else
•Your alpha comes from seeing what others do not see

If you do not have a clear edge yet:

•Do not build anything
•Use existing tools to learn and experiment
•Find your edge first, then decide what to build

Question 2: What are your constraints?

Time-constrained, capital-rich:

•Subscribe to signals
•Pay for infrastructure
•Focus on risk management and position sizing

Capital-constrained, time-rich:

•Use free open-source tools
•Build slowly over time
•Learn by doing

Both constrained:

•Start with paper trading on free platforms
•Focus on education before execution
•Do not rush into live trading

Neither constrained:

•You have options
•Consider what you enjoy
•Build where it gives you satisfaction, buy where it does not

Question 3: What is your goal?

Goal: Make money trading

•Minimize time to live trading
•Use existing tools wherever possible
•Focus energy on finding and validating edges

Goal: Learn quantitative trading

•Building teaches you more than using
•The journey is part of the value
•Accept that it will take longer

Goal: Build a trading business

•You need to own your infrastructure eventually
•But start with existing tools to validate the business
•Build custom only after proving product-market fit

The Honest Truth

Let me be direct about what I have observed over years of running TargetHit:

Most traders should not build their own infrastructure.

Not because they cannot. But because the opportunity cost is too high.

The traders I see succeed fastest are the ones who:

•Use existing tools to start trading quickly
•Focus relentlessly on finding edges
•Treat infrastructure as a commodity
•Only build custom when they have a specific, proven need

The traders I see struggle are the ones who:

•Spend months building "the perfect system"
•Never actually start trading
•Rebuild their infrastructure repeatedly
•Confuse building with trading

Building is fun. It feels productive. It is comfortable because you are learning and creating. But it is not trading. And if your goal is to make money trading, you need to actually trade.

When Building Makes Sense

That said, there are situations where building your own system is the right choice:

1. Your strategy requires custom infrastructure

Some strategies cannot be implemented with off-the-shelf tools. If you are doing high-frequency arbitrage, complex multi-leg options strategies, or using proprietary data sources, you may need custom systems.

2. You have proven edge and scale

If you have validated your edge with existing tools and are now scaling up, building custom infrastructure can improve performance and reduce costs at scale.

3. You enjoy engineering

If building systems brings you joy and you are okay with the longer timeline, there is nothing wrong with building. Just be honest that you are choosing the slower path.

4. You are building a business

If you plan to offer signals or tools to others, you need to own your infrastructure. But even then, start with existing tools to validate demand before building custom.

A Practical Path Forward

Based on everything above, here is what I recommend for most traders:

Phase 1: Learn and Validate (1-3 months)

•Use TradingView or similar for charting and backtesting
•Paper trade with existing tools
•Focus on finding potential edges
•Do not write any code yet

Phase 2: Test with Real Money (3-6 months)

•Start with small position sizes
•Use existing execution tools (exchange apps, simple bots)
•Track performance rigorously
•Identify what is working and what is not

Phase 3: Optimize Based on Evidence (6-12 months)

•Now you know what matters for YOUR trading
•Build custom only where you have proven need
•Use existing solutions for everything else
•Scale what works, cut what does not

Phase 4: Scale or Pivot (12+ months)

•If profitable: consider building for scale and cost reduction
•If not profitable: reassess strategy, not infrastructure
•Your infrastructure should follow your edge, not lead it

The TargetHit Approach

Full transparency about why we built what we built:

We started trading crypto in 2017. We tried existing tools. They did not support the alternative data we wanted to use. We built custom data pipelines out of necessity, not choice.

Over years, we accumulated infrastructure: data collection, backtesting, signal generation, execution, monitoring. It was built incrementally, driven by specific needs we encountered while trading.

When we launched TargetHit as a signal service, we already had the infrastructure. We are not asking you to pay for infrastructure—we are offering to share the output of infrastructure we built for ourselves.

Could you build this yourself? Yes. Should you? That depends on your situation. For most traders, the answer is no. Your time is better spent finding edges and managing risk than rebuilding infrastructure that already exists.

Action Items

•
Calculate your true hourly value. What could you earn if you spent that time working instead of building? Be honest.
•
Identify your edge. Where do you actually add value? Be specific. If you cannot articulate your edge, finding it should be your priority—not building infrastructure.
•
List your constraints. How much time do you have? How much capital? What skills do you have today?
•
Make a provisional decision. Based on the framework above, should you build, buy, or take a hybrid approach? Write it down.
•
Set a review date. In 3 months, revisit this decision. Has anything changed? Adjust accordingly.

Coming Up Next

You now understand the reality of building trading systems and have a framework for deciding what to build versus buy.

In Lesson 6: Course Roadmap, we will give you a complete overview of what you will learn in the rest of this course. You will see exactly what skills you will develop and what you will be able to build by the end.

This is the last lesson in the Foundation level. After this, we dive into the technical content—starting with data, then validation, then discovery, and beyond.

See you in the next lesson.