Alternative to Buying New Trading Computers

When traders look for trading computers, many people will choose to buy new computers from brand name stores. Others like to build their own. Rarely, we see people interested in buying second hand computers. Surprisingly, the best deals in buying computers now come from the brand name corporate refurbish outlets. These computers offer many advantages over the new computers, especially if you are getting a computer for active trading. For those who are interested in getting a dedicated computer for day trading or a few computers to build your own trading bot farm, it is a bargain you should not miss.

1980s Redux

Back in the 1980s computer technology was advancing at a very fast pace yet the total computation power of the new computers introduced at the time are still too weak to be considered significantly different from the prior generation of computers. At the time, the computers you were using are good enough to allow you to do your word processing and spreadsheets at reasonable speed. The drawbacks are mainly related to file saving and printing. Thus, for majority of computer users, it was not necessary to buy the latest technology at all to get the best value out of the investment on new computers. At that time, the second hand computer market was hot.

Since then, the technology world has advanced so much since the 1990s and early 2000s. The changes were so drastic during that time, no one wanted a computer from 5 years ago. The second hand market was toasted.

Nowadays, it is the 1980s all over again. Unlike the past 20 years where we see significant improvement of computation power on PCs every year to meet the demand of the average users in everyday tasks, the need of the average users was met several years ago at the middle tier level. In other words, the transformation of personal computers into consumer products was completed back then.

The PC technology from 5 years ago is fully functional and powerful enough to take on every tasks expected today. Trading is not a very demanding activity comparing to the other business needs. Thus it is perfectly fine to use the middle to higher end computers from several years ago.

The problem is, where do you get these computers at bargain prices?

The Problem with Second Hand and Retail Refurbished Computers

Buying second hand computers from someone you don’t know often poses the risk of buying a defective computer. It is not necessarily a computer that does not work at all. You would not buy the computer in the first place anyway if you find out it does not work properly. The more subtle issues like a problematic hard drive or a computer that die on you only after using it several days are much more difficult to identify. Hence it is in general not advisable to buy second hand computers unless you know the person who is selling you the computer or that you have enough expertise to tell if the computer is in good shape.

Another issue with personal second hand computer market is that many people do not have the proper expectations from selling their own computers. The second hand models available usually are ones from last year where the seller is upgrading to the latest models themselves. The sellers tend to price their computers too expensively. In short, you are not going to get a good deal or significant discount from buying a new computer after all.

The retail refurbish computers suffer the same issues like the second hand market. The brand name manufacturers do not offer significant discount on the computers because they know these computers are the latest models. They are selling them because these computers are returned to them due to manufacturing defects. By fixing the computer up and dropping the price a little, those who want the latest technologies but on a tight budget will give in to the offers anyway.

The Corporate Refurbish Scene

The real bargains in buying refurbished computers nowadays come from the corporation world.

If you have never heard about them it is not a surprise. Many companies do not buy their computers. They lease them for both cash flow and taxation advantage. At the end of the lease terms or when the companies are running out of business, these computers are often returned back to the brand name manufacturers or their leasing operations.

Since these computers are mostly paid for, the goal of the brand name manufacturers is to simply squeeze out the remaining value from these computers as oppose to throwing them away. By fixing up the computers including clean Windows installations and replacing the defect parts if there is any, these computers are as good as new. These computers are not marketed directly at the brand name computer manufacturers’ main retail channels because that will hurt their retail businesses. Instead, these computers are sold through auction places like ebay and the corporate leasing operations’ websites.

Why Going Through The Trouble At All

Many of these refurbished computers are models from several years ago because they were leased to companies. Many of these refurbished computers perform at about the same level as the new middle tier computers at 40% discount. If you wait for the fire sale you can often get them at 50% discount or better than the price of comparable new models.

But why going through all these trouble to look for these computers if you can afford to buy a new one anyway?

Well, it is all because Windows 8 and 8.x are garbage in terms of stability for running a trading platform. At this point in time, Windows 8 is still having problems with all kinds of devices, most notably USB drives and devices. It means you cannot even trust your computer to be able to backup properly to your USB backup drive. It is no big deal for a gaming computer. It is a big deal for traders who depend on their computers to make a living.

Best yet, these refurbish computers often come with Windows 7 Professional license which worth $100 to $150 above the non-pro licenses you get from the retail computers even now. As mentioned in my article on using Remote Desktop, you need the professional licenses to be able to utilize this powerful feature of Windows. Since it is now getting difficult to buy Windows 7 with new computers, this is probably the best way to obtain the license.

You also get a warranty from these brand name companies for 3 months to half a year on the refurbish computers. This is as good as the new computers can offer. After all, if the computer has a problem, it is likely to surface in the first month. If it is fully functional under heavy usage for couple of months, it is likely to be operational going forward. This warranty given by the manufacturer resolves the dilemma of buying second hand computer from a stranger on ebay or kijiji.

Looking Ahead

The stagnation of technological growth at the desktop computer level should continue until there are new ways in utilizing these computers. For now, all the rage is with the tablet markets and portable devices. Technological focus on these portable computers means this corporate refurbish scene should continue for a long time.

Taking advantage of this until Microsoft finally produce a stable version of Windows 8, 9 or 10 is probably the best strategy for your trading computer purchase strategy. Given the track record of Microsoft, I am not that optimistic we will see a stable version of Windows 8 in the next few years. In fact, we will probably never see a stable version of Windows 8 good enough for mission critical usage like day trading because Microsoft is moving onto Windows 9 later this year.

The source idea of this article came from a friend who just built a trading bot farm with 5 computers, each running multiple users with the Remote Desktop login technique. He is not using top of the line computers as one might expect. Instead, he bought these computers from Dell Outlet at dirt cheap price. His setup is the equivalent of running 20 to 25 bots at the same time executing his trading models. Now that I know about this strategy, I will get my next computer this way too.

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