Firms stealing strategies....

Firms stealing strategies do happen. But that's not an excuse for losing.

I think more than 1/2 of strategies out there is either stolen or a variation of a stolen strategy.

If you feel offended, might as well create a strategy on your own from scratch with just a list of TOS quotes.

It's just part the game. Traders lose because the trader sucks.
 
Most strategies have been around for such a long time that it's really not stealing. Even if they do steal a strategy, in reality they won't be able to effectively implement without your mind process. The strategy I use is being used by so many people it's ridiculous, but it's the little things I do that make me successful in implenting it. Those little things are in my head and can't be written down. Stratagies are given away in books all the time, but most people can't make money based on them. Why? Cause the author can't put into writing all the mental processes that go through his head when he executes it.
 
Quote from jaan:
i also believe that there's NO strategy that cannot be diluted by front-running -- some just require more capital than others.
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Disagree. There are both general and specific strategies that do not perform as well when too many people begin to trade the same issues. Look at the open order strategy as a well known example. I know some traders trading OO and are guarded about the specific stocks they trade.

I was also referring to one particular prop trader I know who made 7 figures last year and last I talked to him 2 months ago he was on target this year. He trades in THIN stocks and relies on very specific patterns that can only be exploited in thin stocks.

Talk to any trader who trades size in thin issues and ask them if front-running will affect their strategy or not.
 
Quote from praetorian2:

5) Lets assume that a trader has an uncanny ability to buy microcap stocks. He is looking to buy and hold for 5 years. He is looking for a 300%+ return. He often needs to buy 500k-1m worth of stock, so in a stock with 10m shares outstanding and a price of 3 a share, he is buying 3% +/- of the company in the open market. If over a 5 year period, he's averaged 100% returns, what's to stop a firm from seeing his success and trying to duplicate it by buying the stock also. Maybe they'll tell their best accounts of this stock also. Won't this harm the trader who needs to buy stock at a good price. Even if this firm only buys 25k shares, that's a huge detriment to the trader. Isn't this a concern. It's one thing to flip the stock out after a gain of 25%, but it's another thing to look to hold for a long time.
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Isn't this just what daytraders try to do to institutions every day? Spot size and get in front of it?
 
I've found in the more active issues where all the day traders are, I use the fact that many guys use the same strategies over and over. If I know that we've hit a level several times and guys are using it as a resistance point, I don't go with them, I simply wait and go against them, pushing them through the level, and then watch them run and cover:p

knowing that everyone watches almost the same criteria helps to know where the sheep will be going :D baaaaa

suddenly I feel hungry for lamb
 
Quote from dottom:
Disagree.
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sorry about the double-negative wording. what i meant was that all strategies DO suffer from front-running. in your first message you seemed to imply that there are some "general" strategies that are immune to front-running.

- jaan
 
Quote from jaan:

sorry about the double-negative wording. what i meant was that all strategies DO suffer from front-running. in your first message you seemed to imply that there are some "general" strategies that are immune to front-running.
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Ah, then we agree. :)

An example of a "general" strategies I was referring to would be long-term trend following. The time horizon and liquidity of markets that most long-term trend followers participate is pretty much unaffected by front-running. But there are exceptions.
 
I, too, have wondered whether a strategy that I have traded for years has been stolen by a broker that I shared some details with in the due course of negotiating commissions and risk management criteria.

In my case, it's obvious that I have a competitor because I can see their bids/offers in the illiquid markets that I trade. The big problem is that they are doing things that cost both of us money, in the way they place and manage their orders, their pricing/risk model, etc.

When they first showed up, I thought about trying to push them out, but that would only cost me more money, and they might see what's wrong and fix it, or spend time and money pushing back so neither of us make any money.

What I'd really like to do is find out who it is and talk to them (I think). Any clue how to do this? Should I hit one of their orders and then try to ask for the identity of the contra-party? Has anyone done this? What kind of information do you get from an ECN? Just the subscriber name, or do you get the account number too?
 
what about hackers stealing strategies?

Most info on the web for a lot of direct access brokers isn't encrypted at all before going to the exchanges or NASDAQ. A lot of it just passes though the internet. It wouldn't take too much for a hacker to realize what he could easily do with the info.

I've heard of a few trader going from one prop firm to another for the original discussion of this thread as they realized it would soon be spread to others in the firm.

This is one of the reasons I'm VERY quiet about some of the stuff I do now as I would prefer to keep it away from competing firms.

Robert
 
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