Securing successful strategy from the broker stealing it

Discussion in 'Professional Trading' started by yoyotrader, Apr 27, 2020.

  1. Hey all,
    This maybe "too simple" question for the Pros, but I have not found a sensible answer elsewhere.

    Is there any way to protect myself from brokerage firms or trading software (TD Ameritrade, Tradestation, Multicharts) "stealing" my strategy, either through the successful back-testing numbers showing up on their end and simply copying it, or them seeing a steady and fast account growth, analyzing and reverse engineering the strategy?

    Not sure "legal agreements" would do me any good - I would never know if one of the platform programmers or trade desk folks is exploiting software holes andtrading on the side with the successful customer strategies.
  2. Girija


    They certainly have better things to do.
  3. kmiklas


    Nothing you can do. In practice, it's impossible to assert your IP.

    If your algo is running live, they don't even have to hijack it. they can just front-run your orders, and/or mirror your positions as you buy/sell, and realize profits from the smarts of your code.

    Even at the exchanges, the orders are front-run by HFT/ULL algos.
    Trade Prophet and yoyotrader like this.
  4. Pekelo


    There is only one way to do it, be unprofitable.
  5. trend2009


    do not agree. i guess brokers firm like IB would not have interests. but employees at the firm may have interests stealing the strategy, since if he can make money from market, it is much more than his salary.
    rd8, henry76 and qaz like this.
  6. trend2009


    how Medallion protect its strategies from clearing house or brokers?
  7. virtusa


    Now I understand what FCM stands for: F*king Criminal Merchants.

    They always win:
    • whether you win or lose you always pay them commission
    • you spent time and money to build something profitable
    • you pay all the development costs included the losses
    • you start to tradeand take the risks
    • they follow you and steal your signals when you finally get profitable
  8. virtusa


    I read somewhere some of these giants have their own FCM. I even knew the name of that FCM but forgot it. Could not find it anymore. :mad:

    Theoretically anybody can start a FCM. For these giants the requirements would not be a problem, and the needed money also not.
  9. kmiklas


    Heh... I'm talking about the retail broker. Renaissance runs their algos on a separate box co-located in a leased cage at the exchange and connected to a server by a short piece of straight fiber. Cost per month is probably 1M or more.
  10. Girija


    Pure imagination. I was a quant developer at a investment bank. We had access to backend data but if you read data from production you will need to provide explanation. Prior to joining we had to disclose all investments. We had a toll free no to contact before we can sell anything. We could not trade. We had to use target date retirement plans for 401k. All firms have internal controls. Unless there is a cyst svc request accounts cannot be looked.
    But data theft is different. On a breach it is a headache for the firm.
    #10     Apr 27, 2020