Remiraz, (& also Version77) The broker would not need to "reverse-engineer" your method or even know anything about how you are generating your Buy and Sell decisions. Once the successful traders have been identified, the broker can simply use his software to add his desired quantity to the quantity you entered. All orders, even for 'direct-access' trading pass through the broker (to check for margin). It would be much simpler for the broker to take the opposite side of the other 95% of the traders. Taking the other side of your customers' bets (known as 'coppering') has always been a sure way of making money on Wall Street. I think, for most traders, a much more important question continues to be ' How safe is the trader himself from his OWN strategies?"
If you had say hundreds or thousands of accounts that are down to half size, surely an overall fade would be profitable. LOL, and when a trader is getting really low in his account, then doesn't trade for a while, offer free commisions! Plus, I bet some data mining could really prove helpful. Like if a trader is down for the day, then puts on a much larger than normal trade, fade that puppy. Or if you get one of those double-downers that never close out a position at a loss, fade those guys to the moon!
Its not necessarily the house, its more likely one or a few of the the staff are tempted. Most forerunning also happen not because the house wanted to, but just the few guys taking care of the accounts do.
Your strategies are definitely not safe from your broker. I clerked for a brokerage firm and could look at anybody's statement I wanted to. I thougt I could learn some interesting strategies by tracking their accounts. I found that I couldn't begin to fully understand the best traders' statements - they were simply too complicated to extract any useful information from. I think there are so many variables involved in putting on a trade, "reverse engineering" would be time consuming and horribly difficult. I was looking at option traders' statements, but I think the same would probably be true with any instrument.
they are never safe from your broker-------------use multiple accounts and switch things up at times.
not follow or fading mind you but reverse engineering his strategy for himself. if u run a brokerage firm and u know there are say 5 guys consistently profitable every month. aren't you at least bit interested to find out what their strategies are so u could trade for yourself?
you could mark their daily entry/exit and try to figure out their edge. and you can see their position sizing methods easily. by the way have u seen anyone using martingale?