Registered: Aug 2010
07-20-12 11:19 PM
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?
In my experience, it doesn't seem like you can really prevent this over the long haul. In my prop shop, ideas float around and you can literally see everyone doing similar things and the guy who makes the most money just tends to do it better than everyone else and/or has more buying power. The guys at the top see who does what and they try to replicate it, so you see subtle edge degradation over time.
And before I was at this prop shop, it was common to see programmers and traders leave and go start their own attempts at competition once the non-compete agreements expired. So, I think the moral of the story here is that you don't have a choice but to keep innovating and making sure your method is the most adaptive and most responsive to changing market conditions.
Oh, and punish the hell out of other traders when they are wrong and you know they are wrong. :-)