execute entire strategy with one broker?

Discussion in 'Strategy Development' started by MadSpeculator, May 4, 2006.

  1. Hello:

    I am a new trader. I have developed an ATS which, in paper trading, is showing decent profits.

    My questions are:
    (1) If I execute my entire strategy with one broker, is there a possibility that the broker copy my strategy (given that they have access to all my transactions)?

    (2) Are there mechanisms/regulations that prevent brokers from copying strategies (front-ending, or reconstruction the strategy based on transactions)?

    (3) Can the same happen in a prop house (if a trader is successful, others copy her/his strategy by reconstructing the transactions)?

    (4) Am I being paranoid?

    These questions came to me after I read about LTCM in a book by Roger Lowenstien where LTCM used different clearing houses/brokers to 'prevent' them from copying LTCM’s strategies.

    I don’t know if this is the correct forum for this question; if it is not, I apologize for posting it here.

  2. stktrdr


    so how may billions do you have under management?
  3. you are not being paranoid - and yes if you are at one broker (especailly if your strategy is fully electronic) it is very easy for them to copy - and you would never know about it - therefore most professional (non prop) traders trade at more than one house
  4. eagle


    For reputable brokers stuff like that is not defined in their business model. Their business is to promote the trading, taking the sure side (commission), not the risky side (betting). Don't worry too much, better to concentrate on your strategy. By the way, don't you be happy if your finding have benefited both yourself and someone you do business with, your broker.