Firms stealing strategies....

Quote from AAAintheBeltway:



Isn't this just what daytraders try to do to institutions every day? Spot size and get in front of it?
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Praetotian2 ,another thing you have going for you is by definition,micro cap limits size + number of players.:cool:

Further limiting players is many will not play stocks under $12.oo

That one is less likely to be stolen also because you are under the $ 5.oo radar screen.
 
Quote from praetorian2:

I have spoken with a number of traders and quite a few are concerned that their brokers will or may have stolen valuable strategies. In trading, our strategies are our most vital strengths. It is for this reason that many top traders shy away from posting good information on these boards. With the exception of their closest trading buddies, only their brokers know of their strategies and trade histories.

This information is very valuable to a dishonest principle who wishes to capitalize on strategies that it's most profitable traders make large quantities of money from. If these strategies are employed in situations where there isn't a lot of liquidity, the profit potential will be quickly arbed away and the strategy will become worthless. Even, worse, if this dishonest principle shares the trading strategies with others, or worse, teaches them to other traders at the firm, the strategy will be arbed away, no matter how liquid the situation is.

After having spoken to a few people, and having heard other stories, I have grown to believe that there is a massive potential for abuse of the trader/firm privaleges. I was wondering if anyone here believes that they have had certain strategies comprimised by prop or retail firms.

The people who I've spoken to have used certain strategies for long periods of time before going prop, and have then had the strategy "mysteriously" stop working after joining a prop firm after a long period of massive success. They have been led to believe that their strategies have been canabilized by the prop firms. They can think of no other reason for the strategy to abruptly stop within a month or 2 of joining a prop. I was just curious if others thought this was a serious problem, or would like to share any suspicions or stories.
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Go on a losing streak, that'l teach em.

Actually, just because someone knows your strategy.....that doesn't mean they will be able to execute on it.
 
Lets say though that you do pick those 50c stocks that go to 20. And you do it often over a few years. Wouldn't you think that others will just follow you. I'm not talking about daytraders. If you are buying something that trades 5k a day, you can realistically buy 10-20k a week and not move the stock much. You won't make the chart look like something for daytraders to follow you. I'm talking about people at those firms. Wouldn't people be looking at your trading records? This is just one example though. Say you have something really good which is mechanical, and a chimp could do it. There are very set rules like enter at 10 if a and b, and sell moc. It is something that if was explained, everyone would do it, and there's no need for intraday watching. Just a set stop point. Wouldn't many people steal it, especially if it made 10-20% a month with minimal drawdowns??
 
Quote from OPTIONAL777:



Go on a losing streak, that'l teach em.

Actually, just because someone knows your strategy.....that doesn't mean they will be able to execute on it.
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I hope the scurvy bastards that copy my strategies followed me into THC. That one definitely taught 'em, and I meant to do that (not!).
 
Quote from praetorian2:

Say you have something really good which is mechanical, and a chimp could do it. There are very set rules like enter at 10 if a and b, and sell moc. It is something that if was explained, everyone would do it, and there's no need for intraday watching. Just a set stop point. Wouldn't many people steal it, especially if it made 10-20% a month with minimal drawdowns??
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Such a strategy would be diluted under those circumstances, imo.
 
Quote from alanm:

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?
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Careful who you talk to. What you are describing is collusion, and the reason mm's got sued in the early 90's.
 
Quote from Judge Smales:
Careful who you talk to. What you are describing is collusion, and the reason mm's got sued in the early 90's.
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I didn't say what I wanted to talk to them about. I have no intention of engaging in anything that would be considered unethical or manipulative.
 
And I thought that I was being paranoid about my systems...

I was even feeling guilty about that. But I was right, as I see.
 
I want to revive this thread as I think it is even more relevant today than in the past. With automation becoming more common, what are people doing to protect themselves against theft? It seems too easy for a broker to just start watching the most profitable automated strategies and front run them.
 
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