Registered: Jul 2006
07-19-12 07:23 AM
Quote from ChadZ1:
So I didn't know where to put this, but figured those of you trading for a living might have shared this concern.
This is probably paranoid, but imagine you come up with a very successful trading strategy and have consistently had GREAT returns for a number of years. Is there any reason to be concerned about your broker noticing your great returns and trying to copy your trading strategy and thus ruining it? Or, perhaps, if they can't figure the strategy out, and if they're one of the electronic brokers, they might just tell their system to make the same trades every time you place them except have their system put in their trades first.
Is there cause for concern? I realize one might say there's nothing to be worried about because you'll never come up with a strategy so good that others would notice you above everyone else and want to copy, but hypothetically what if you did? Are there ways to protect your strategy?
I haven't read the thread so excuse me if you have already got this answer.
There is nothing to be concerned about. Your broker makes money off of your commissions and thus wants to keep you happy so you keep using his service. The broker also wants to you accumulate assets so you generate more commissions for him.
What will actually happen if you have long term successful performance is the broker will shop you around to the asset allocators in order to increase your assets under management and thus generate more commissions for his pocket.
You will become bigger and bigger with almost no initial effort on your part.
You can be assured that the broker will do this because if he doesn’t he knows his competition will and if he doesn’t beat them to the punch you will be lured away and he will lose everything.
As I said on the “What’s the difference between trader and portfolio manger?” thread: “Talent is not invisible………There is no invisible white whale in finance.”
If your performance is good the broker will be trying his best to keep you rather than steal from you.
The fact is if you are good your problem will be trying to figure out your asset capacity rather than a broker risking losing your business while he attempts to reverse engineer your methodology.
All the best.
Warmest Regards, Smoker