Can providing signal service kill your edge?
- Thread starter heispark
- Start date
If the inputs are publicly known it can be reverse engineered AFAIK (system identification). Not that I ever attempted it myself.
It entirely depends on capacity of your market what subscriber base you could realistically have without starting to see significant degradation. Especially for a strategy that entails someone else losing money, that someone may dynamically respond.
It entirely depends on capacity of your market what subscriber base you could realistically have without starting to see significant degradation. Especially for a strategy that entails someone else losing money, that someone may dynamically respond.
Guys like tim Sykes and warrior trading have chat rooms with over 5000 people. I am almost certain they make their money (besides mentorships) from people piggy backing their idea in illiquid markets like penny stocks.
More fun to allow you to get in then larger traders come in and push market to trigger your stops if too tight, then reverse so take those who want to take 2nd bite at signal jump on and push market even further. I have developed couple signals based on retail's failures, but some of the original entries are profitable, let's retail "think" they are trading. And yes, some methods get too many subscribers and makes it impossible to get choice entries. I think almost anyone been in trading fair amount of years can reverse engineer almost anything, it is more of a game of doing since trading gets boring of waiting.
Another vendor might take service and he gives his clients your signals as well.
But the worst of is dealing with the public, most are cry babies, if you thinking of doing a service, better to do the Earn2trade thing, then you don't have to share your knowledge and hope it don't gets stolen.
Another vendor might take service and he gives his clients your signals as well.
But the worst of is dealing with the public, most are cry babies, if you thinking of doing a service, better to do the Earn2trade thing, then you don't have to share your knowledge and hope it don't gets stolen.
I think it depends a lot on the timeframe ... The shorter the timeframe, the more likely it is to be destroyed by its own success.
I don't know about Sykes, but for Warrior I find it quite entertaining. On one hand, as you indicated, his strategy is enhanced by more retailers trading it(and his subscribers benefit from it as well, not just him). However, it is also the reason it will stop performing with popularity. Of course he will make enough money before it happens, so win-win for him. Lots of people will be hurting, but some will learn enough and adopt ... Same old same old.
Not if you are on the same side as the investors that follow your signal service advice, I would think. And besides if you make enough money from your signal service, would you still bother trading?
Robert Morse
Sponsor
I'm not a fan of signal services. I buy a stock, then send out a buy signal to my followers that then move that stock up so I can get out higher. IMO, anyone with a signal services should be registered with the SEC and be required to have a waiting period or not trade to avoid a pump and dump outcome.
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I've actually seen this happen to a profitable trend following advisory service. The buy signal had to be changed after a couple years....
The problem with the answers here is that one can't know whether the system failed (or worsened) on its own, or whether it was caused by subscribers to the signal.
That said, depending on the trade frequency and the number of followers, generally speaking: traders following traders tends to reinforce the move in the direction of the trade. For example, "pump and dump" type schemes take advantage of this.
More simply: if 'everyone' is buying ... price rises ... and vice versa.
That said, depending on the trade frequency and the number of followers, generally speaking: traders following traders tends to reinforce the move in the direction of the trade. For example, "pump and dump" type schemes take advantage of this.
More simply: if 'everyone' is buying ... price rises ... and vice versa.