Home > Technical Topics > Technical Analysis > So I've "invented" an indicator

So I've "invented" an indicator

  1. After tooling around with some different ideas, i came up with an indicator that I like to use in my trading. I have automated it, and it is applicable to many different securities. I have checked around, and I haven't seen anything else like it.

    My question is: what do I do now? Can I patent it? Or do I get a trademark? I suppose I could contact an intellectual property lawyer, but I hate dealing with those guys in general. For example, for bollinger bands to be called bollinger bands, what did he have to do?

  2. You can trademark it. You don't have to give it out though.

    Mark Cook's Cumulative Tick Indicator is trademarked, but no one except him knows how it works.
  3. Start trading it and documenting your trades...

    Give it a fancy name too like Hilojack Crossover or whatever. :D

    That's it.

    However, if you want to market the indicator...the trading it and documentation is in the right direction.

    A book or two couldn't hurt.

    Also, throw in a brokerage statement here and there to keep away the alley cats.

    The point is if you plan on marketing it...you want leave a paper trail just in case someone else comes up with the same indicator and don't know you exist especially if they decide to market it.

  4. No patent. Sorry.

    Does anyone pay royalties to Bollinger for using his indicator? Don't think so.
  5. The best advice?

    Trade it and make a mint over the next couple'a years using appropriate risk management and position sizing (assuming the indicator actually works and gives you solid positive expectation).

    Good luck,

    Jimmy Jam
  6. My advice: If it is a really good indicator, then just use it. If not, then sell it as a "really good indicator" with sensational simulated results. A trademark on the name may give it some cachet to people who don't know any better. And don't worry about your soul. As a trading-related vendor, you're going to hell anyway.
  7. :D
  8. Thanks for the replies fellas. I do plan on trading it, not marketing it out. What I'd like to do is pick up some institutional money and run it as a fund. I've spoken with some money guys and they tell me they'd be interested if they could have apiece of it, provided it works as well as expected. The backtesting is off the charts, so even if it did a fraction of what the backtesting shows, it would produce double digits returns.

    Basically, I am trying to protect myself and my system. I've heard horror stories of guys getting their systems ripped off and then shown the door. I figured that by trademarking (patenting the process is apparently out per an above poster), would be a good start to protecting the work I've done, in addition to the ususal non-competes and disclosure documents.

    Any other thoughts and how to protect myself should I be fortuante enough to attract institutional money?

    Keep ur eyes open for Hilo's High-Lows, coming to data service provider near you!!! LOL
  9. OK

    You absolutely must speak to a good Lawyer.

    No two or three ways about. And unless one is plugged into this Forum, you aren't going to get the professional advice you need here.

    Otherwise we both (hell, we all) know what's going to happen (hint: time for the lube).

  10. How could you hope to "protect" an indicator once you have disclosed it? How could you possibly enforce such "protection" from "unauthorized" use once the indicator is in the hands of others? (And how would you prove "unauthorized" use?) The only way to "protect" an indicator that comes to mind, once it is in the hands of others, is via "black box." However, I can't imagine anyone in their right mind using a black box with real money.
  11. Yeah, I figured as much about the lawyer part, although I'm trying to prolong that agony. I was wondering if anyone else has had any experience (good or bad) to share with marketing automated systems to institutional money. How did you protect yourself?

    I'm definitely not up for the Dr. Jelly-finger treatment, JJ, as they probably wouldn't even have the courtesy to give a reach-around.
  12. No patent. Sorry.

    Does anyone pay royalties to Bollinger for using his indicator? Don't think so.
  13. Agreed Thunderdog. That's what I am trying to figure out. What is it that keeps every I-bank from stealing automated programs from their creators once you start using their systems, money, clearing, etc.? These are the things I am trying to figure out. I do not plan on giving out the formulas, criteria, etc. however, I don't think it would be difficult for the system to be copied.
  14. Although I have never dealt with institutions in this regard, my guess is that you are off base. I doubt they are in the market for automated systems from outsiders. (Just guessing here.)

    If your method/indicator is so good, then why not trade it, develop a track record and offer to manage institutional funds? You will not have to disclose the nuts and bolts of your method, so it will remain your own. And if you're in a hurry, shouldn't your self-described "off the charts" performance get you there fast?

    For the purposes you have in mind, I think that introducing a lawyer in this picture would only ensure that he emerges as the principal beneficiary.
  15. Wow, T-Dog is even more cynical than I am! :eek:
    Everyone signs non-disclosure agreements and supposedly then every thing is copacetic.

    The thing is, (once they pirate and copy your system), all they have to do is make minor alterations to it, AND IT'S NO LONGER YOUR SYSTEM!.
    Like T-Dog said, if you really want OPM that badly, you should build your system with a solid track record from the ground-up.

    I will personally guarantee you, if your system is as good as you say it is (hey, why not) people will be THROWING their money at you, hand over fist.

  16. The point of this thread wasn't to tell you how great my system is or that I'd like to raise OPM or whatever, the point was how to protect my system IF that is the route I decide to go.

    So basically what I've gathered from this thread is that I can trademark but not patent my system, and other than non-disclosure documentation there is no way for me to keep someone from copying it.

    Would anyone else care to chime in?
  17. Moderator. This thread is typical ET Spam. Please delete thread and ban user. Thank you.
  18. I was just thinking the world really needs another TA indicator.
  19. That's funny! :D :D :D
  20. At the risk of belaboring the point, the only way to protect your system is to keep it to yourself.

    A trademark is only for the name. (Who cares?) A patent is out of the question and a bit on the laughable side. And even if you were to somehow obtain a patent, which you could not, how would you enforce compliance? Further, in applying for a patent, you would have to disclose the exact nature of your "process." Therefore, I think it would be a matter of public record. It is unworkable even if it were possible, which it is not! You could copyright your method, but that is only for literary purposes. What good would that do you?

    As for non-disclosure agreements, I would suggest you have it printed on soft, double-ply paper. At least then it will have some use. For all practical purposes, how would you go about policing and enforcing a non-disclosure agreement? Really. Think it through.
  21. Maybe not, but Bollinger has pretty much made a career out of one indicator. That's not to say he isn't a smart guy or good trader, but the the name recognition he's received though a single indicator is pretty amazing.

    Compare that to Welles Wilder who introduced the equally famous Parabolic SAR, Relative Strength Index (RSI), Directional Movement Index (ADX) and Average True Range (ATR) all in one book. Apparently he wasn't as good of a marketer, though, and then he left mainstream TA in search of Holy Grailish Delta and Adam phenomena.

  22. HiLo:

    Let's make sure we understand what is "the way you want to go." That determines everything.

    From what I'm reading, this is an automated system, correct?

    Can you backtest data and show the results? Are you putting together some type of account for tracking it with real money?

    If you're going to raise money, then the track record is what you need -- they don't need to see the actual indicator. You can disclose it in "general" terms in your offering documents when you raise money but without giving away the recipe.

    Although this post does not constitute legal advice, I am a lawyer so feel free to PM me if you want to talk thru this in some more detail without all of the noise of the ET thread.

  23. --------------------------------------------

    Hi... HiLo
    A number of years ago there was a guy near Minneapolis that developed an indicator to help him evaluate the SP500. He had fairly good results so he started selling his "Timing Service" on the internet for monthly fees. That track record was good enough to get him into management of a large pension fund and that pay was more then enough to make everything worth while.
    Six figures a year just to advise the fund on a weekly basis.
    If I run across his name, I'll post it. I doubt he ever told anyone.
    Why? The fund just wanted advise that had a good track record
    Good luck... agpilot
  24. So basically I should plan on having my system stolen, unless I can somehow manage to build all of the infrastructure myself, self-clear my trades, and use my own money. As soon as I use an I-bank for any of these things I am done. Does that sound about right?

    Does anyone have any EXPERIENCE using automated systems with I-banks?

    MichaelScott can kiss my ass as this is a legitimate post asking legitimate questions. Ban him for being an ahole.
  25. You can plan on having your system "appropriated" if it is any good and you disclose it. Trading it on your own is not a form of disclosure. How did self-clearing of your trades ever enter this discussion as a requirement?
  26. Hilo:

    My sense is that you should manage money myself or sell the signals as a timing service in order to fully protect your "intellectual property."

    Otherwise, you're going to have to disclose the stuff. Granted, you can put agreements in place to protect you but I'm sure with this type of thing, it's hard to actually prove that someone stole your indicator.

    Regarding michaelscott -- he needs the market to knock him down a few notches.

  27. Is it price/volume/sentiment/order flow/astrologically derived ? John Bollinger was interviewed in Traders UK magazine this year(largely institutional mag) and he said he saw no point in making it a secret so his bands were an open book from day 1. Donno about tagging a name like "...gunslinger..." to it though ? What markets was it developed for ? Spot FX or Pork bellies ?
  28. Exactly, which is essentially what I wrote in my post on page 3 of this thread.

    So, you're a lawyer, eh? In medical terms, you boys are known as Ear, Nose & Wallet guys.:D

    P.S. Selling the signals as a timing service in order to keep the system under wraps didn't occur to me. Good thinking. Although I can't imagine subscribing to such a service, I suppose that some people do.
  29. LOL

    1. MichaelScott and his other scotty bum buddy have proven you can't be banned for that. Shame. But hell a lot of the rest of us would go too.

    2. People will steal it no matter what you do if its really any good (just one of the techies say). If its good then trade it.
  30. they sign a disclosure agreement, fine.
    then they trade it from a secret account and you
    never get to find out.

    you give it compiled (i.e. protected). a cracker from country
    xxx defeats your security while eating breakfast and by
    the end of the day everything is reverse-engineered.
    he gets paid $300 and is really happy about it.
    they make millions and are also really happy.

    bottom line: a secret is only a secret if nobody knows about it

    keep the goose to yourself. once you are rich for three
    generations to come, give it out to the world and you get
    famous etc etc...

    it's a lonely ride

  31. Do not sell it or patent it.

    Market it as a news letter or signal subscription service. Look into collective2 and then once finessed sell the signals on your own subscription website. Once your subscription service is set up, find something else to occupy your time or you will end up tinkering with the system and destroying it.
  32. Realpissed,

    I think your advise in right on and once you have something that works you need to have some clerks or systems brokers trade or monitor the system or you will tweak it to death trying to find the "Best" parameters.

    I just spent 2 years working on a Index System and have spent 4 months tweaking and have only made showed a slightly smother curve.....Anyway turn on the bot and let it do its thing.

    Gook luck Hilo
  33. In the period 2001-2004, when I was working on T/A, I have created lots of original indicators.
    They were all released for free and are available to any user.
    Some of them are included in T/A software packages.
    Many traders all around the world use them at their own risk of course.
    What I know is that, someday, my name will ba included in the T/A historical developement.
    Until now, there is no such work.
  34. ===================
    Interesting comments;
    and in an Active Trader magazine interview John Bollinger mentioned OBV, with Bollinger bands.

    And once on Bloomberg or CNBC he showed a chart of SPX, multiyear uptrend, no Bollinger Bands or OBV;
    called it a trading range.

    Probably did help Granville, inventing OBV;
    dont think he ever got any royalties also.:cool:
  35. Send it to me first. I will test it and let you know what I think.
  36. Well if there is a trading system behind it, and it sounds like there is, then wouldn't you want to deal with it as a proprietary method of a hedge fund or smth.

    For example, many quality high end funds, trading groups and even prop desk have their own proprietary secret methods. They can only protect them with silence and a vow to secrecy. They may be using proprietary indicators created by them or specialized quant models.

    For all you know, you did not invent anything new, but are using it in a certain way. Someone may create the same indicator but have different results.

    Seems like what you should do is simply trade it, make money and keep it a proprietary secret system. Once big enough, release the special indicator or whatever and get paid 6 figs to "advise" once a week.
  37. Make your own fortune first with your system, then write the book to share it with the world and you will make another fortune again with that.
    If you have such a winning system you shouldnt worry about how to protect it and market it. you should self absorb yourself in your system, and make money, why waste your time talking about protecting it. you seem a little to concerned about things somebody who has such a great system would be conserned with:cool: Helping people out and sharing it with the world will make you richer than anything else you could imagine.:)
  38. Hi Hilojack,

    Contrary to what others may have told you, it is possible to patent aspects of an indicator.

    One of the reasons that Bollinger Bands or something like it was not patented is that in the eighties when it was created, patent law didn't allow for it. While it is still not possible in the US to patent an indicator per se (as a mere algorithm), it is possible to patent a practical implementation of the algorithm, particularly a computer based implementation, ie software.

    At the time when Bollinger Bands were 'invented' (and nearly all other publicly known indicators) it was not possible to patent computer software. But times have changed and now it is. It is now also possible to patent just the algorithm in Australia (who seem to be the most liberal in their patent law) as long as the variables of the algorithm relate to real things (such as stock prices).

    However as has already been pointed out to you, patenting your indicator will require public disclosure of it (within 18 months of filing your patent). Also you are limited in how you use it before you apply for a patent. If you use your system commercially before you file, your patent could later be invalidated (if someone can prove you used it), although in the US you have a 'grace period' in which you can still file (most other countries do not). Using it for experimental purposes usually won't invalidate it though.

    If you really do want a patent you can most likely get one if your indicator truly is new invention, just go talk to your local patent attorney.

    However in practical terms if you did get patent protection, the monopoly provided would only apply to software implementations of your indicator that you know about. You would be able to take infringement actions or demand royalties from software vendors who wanted to include your indicator in whatever they're selling.

    But of course surely you would only want to disclose and sell your indicator publicly if it didn't work (or perhaps no longer worked), in which case why would anyone want to pay royalties for it?
  39. sell it by proxy..........you continue to trade it while having a staff member(s)to sell it as a timer, online.........you get two incomes, one direct from its employ and a passive one............never sell it directly, never disclose code, always laugh, you're definately going to hell.............you could also do sub stores where you onsell the indicator to folks who onsell its use again...........yeah, definately going to see the man with the spikey tail..........

  40. I quite agree with you KT.

    Some observations hilojack.

    Firstly, now you have a winning indicator, you are 20% into your journey of making a fortune. Congratulations.

    Secondly, TM's and patents are as good as your ability to protect them.
    You will neeed good Attorneys in India, China, SE Asia, and naturally central and latin America.

    My suggestion would be to talk with MS and the music/film industry to see how much to set aside for annual legal fees.