A cautionary tale for system developers

Over the last few weeks I’ve had an interesting and often times humorous interaction
with some folks who contacted me privately on this site. I’ll share the derails for what they are worth and let other system developers decide how to invest their energy in similar circumstances.

My area is developing “black box” trading systems using soft computing. I was approached by a company that had gone through the effort to develop a new and superior trading platform for automatic trading but needed some good trade entry signals to make it work. So the offer was if I could supply entry signals their platform they could turn that into a real money machine. This was told this platform had features superior to Ninja, X-Trader, OpenQuant and all the rest.

I was curious as to why one would undertake the not insignificant task of developing an automated trading platform from scratch when there are many quite serviceable packages out there, and especially why do it without a method to generate the key component, a profitable trading entry signal. But I figured what the hell, people have all kinds of reasons for doing things.

Anyway I proceeded to develop a model for them on the NASDAQ 100 emini future that showed some promise on initial tests with a Profit Factor of 5.35, trading 15 minute bars, and sent them both the entry signals and the raw price data so they could test it on their system.

Then the fun started. They seemed to need all kinds of things and there were lots of problems. It seemed that they would need me to supply an ActiveX control or similar with my entire system in it before they could test my results. It took dozens of emails but I couldn’t seem to get them to understand that you just take an historical price file, which I supplied, and the entry signals which my model generated, which I also supplied and import them into their trading platform and test it. This isn’t rocket science. There were phone calls from the CEO of the company. I gave detailed explanations of how you add value to a system by taking the base signal and use your proprietary system to increase its performance. It kept coming back to this mysterious need to get my system code on their platform before anything could proceed. The input prices and trade entry signals just wasn’t enough for a performance test.

Most of you will by know see a possible plot line to this story. It’s a kind of reverse to the more common “purchase this trading system software application and it will generate great traders for you… and this week we’re having a special sale on the advanced trader package” Instead of paying for a mass market software package that likely doesn’t live up to advertizing the plot line might read “give us your trading system for free, let us reverse engineer the code, and we’ll then tell you if we like it or not”.

This had been my suspected plot line from the second email so I confirmed it by explaining that any transfer of code to their platform would be highly encrypted.
It took less than 10 minutes to get a response that there are no future in a continued relationship and best of luck in future endeavors.

If any developers are approached with a similar offer, feel free to contact me privately and I’ll let you know if it’s the same group.

Jerry

 

So you reckon they would take your (binary) activeX object and disassemble it ?

Rather them than me.

 

I think that's what they thought they were going to do.

It's the only half way logical theory I can come up with since the relationship vanished within 10 minutes of me using the word "encropted".

 

That was a pretty lame attempt at theft.

It's like someone posting "I don't want to work or think too much. Do the thinking for me and then give me the stuff to look at and I'll decide if I want to use it. While you're at it, you can call me 'boss' in your e-mails."

Lazy thieving bastards.

 

Very lame considering that it's a real company, with a real web site and real customers in a industry unrelated to finance or investing. I could see it from a couple of guys working in their basement but usually to create a mid-sized company you have to be fairly smart and if you call on someone for expert advice or services you expect that they are smart as well.

 

You are probably one on a list of 30 they contacted. All it takes is 1 who inadvertently falls for their line and they are ahead of the game. If you cast your fishing line out enough times.....

 

Huh ? Are they going to disassemble and reverse engineer a whole bunch of systems. This is seriously hard going, requiring very skilled people. They would need to be damned fine systems to justify the effort/cost.

I'm very skeptical.

 

I've got the ability to automatically export a model to a number of languages including C++, so they, perhaps not being too technical, may have assumed you just look at the packaged code and have a programmer explain the logic.... I don't know except that the word "encrypted" ended their interest instantly.

 

Maybe it's just some jokers running a business from inside the company and unknown to the company.

 

Not the case as I spoke with the CEO/President guy, who has the same last name as the name of the corporation and it's a rather strange name. You wouldn't use it for a corporate name for any other reason than to show that you own it.