Call me paranoid, but I think you should protect your intellectual property more. Perhaps it is possible to find proper "market neutral" financing - basically some guys/gals who have no clue about what you are doing? The less they are able, willing, and allowed to dabble in the markets themselves, the longer they will need you. I witnessed this first hand while working at a hedge fund - I could easily code most of the strategies of the discretionary traders (and have done so after I left
. I understood there why such labor-intensive methods like chart reading and fundamental analysis are prevalent in the industry, despite their ancient origins (the 30's): the only way traders can stay employed is to remain discretionary. Evolution has weeded out the black box trader. Methods used to separate the costly human inventor from his algos have already been mentioned, but I may also add phishing, hacking, and physical control of hard drives by trojan nephews (I'm dead serious - have read some hair-raising "calling home" e-mails
. Since then I will never be so naive as to even hold anything of value unencrypted or uncompiled online and I strongly feel that handing over the source code to some knowledgeable party is in a naivety league of its own, surpassed only by a publication in a scientific journal with a wide practitioner following. Do not get tempted by the money, do not get tempted by the power - both are of no use if your edge is stolen. Once they separate you from your intellectual property, they will withdraw their capital, and you are back to square one. And the edge will be much smaller, once they strart squeezing it with big money. In the inventor;s business it is the control that matters, and the freedom it brings. I do agree protecting your edge and simultaneously exposing it to outside capital is difficult. You don't want to lose control, and you cannot do it on your own indefinitely since it gives so much less satisfaction. And identyfing who constitutes a marriage material and who a gold-digger is more difficult than you may think. Play a hard-to-get a while, do not hurry choosing your long-term relationships, because everyone has only one edge in themselves... and it is so easily lost. As a rule of thumb, turn down any partner who is too inquisitive about your systems' details - and anyone with the necessary knowledge aquisition skills, engineers for instance, especially software ones, should be ruled out immediately. Professional funds should be considered only if it is their business to seek out new talent and invest in it, as opposed to just employ it (this contract simply does not work for inventors, it just doesn't). But run for the hills if the FoHF manager instead of correlation asks you about the automation. I have no doubt that such for fora as this one are frequented by some trustworthy edge-seekers. Simply try posting your performance here and there. Say that your system earns four times the monthly market return with market volatility and has done so consistently for 12 years, including the last 6 months out of sample, in real time simulations, and after costs. Say it is uncorrelated, with beta below 0.2, and that it has never been optimized other than manually. Well then someone may just find you. They may even ignore the kurtosis. Or is it me who is naive here?
0s
