How to prevent brokers from knowing your strategy?

Quote from trend2009:

you have to know we are not talking abut common scenarios here. the common scenario is 95% of traders lose.
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I'm not talking about common scenarios, I'm talking about common sense within the accounts of the 5% of traders who don't lose. If 1% of those 5% have their strategy stolen by their brokers, I'd be surprised.

Just go on believing what you clearly want to believe despite logic, facts and common sense.

One obvious fact from reading ET for about 7 months now is that posters who start threads like this one, about how nefarious cabal is out to screw the individual trader, and the posters who support the premises behind threads like this one are typically the traders who are not successful. The traders on ET who strike me as having a clue of what markets are about and how they work focus on just making market calls and noting the outcomes, understanding that it's a game of probabilities, while the ones who seem to constantly complain about their struggles are the ones who tout conspiracies. I'm sure that isn't a coincidence.
 
piggy backing a winner is about as common as blowing your nose,decoding his system would be too complicated for your avg backoffice dunce
 
I think it is completley natural to seek information on how to protect your edge. I see this thread as an honest attempt to discover ideas. This Forum would be the best forum on the internet to pose this question.

ES
 
I read this thread as I recently discovered an automated way to make some money and I notice that these few edges that I have made... quickly stop working (perhaps I forward test in Demo too long). I always am chasing new edges. I wasted my time for many years with a bad a Forex dealer who smoothed their quotes and discovered maybe there was a way to make money in Forex with the right set up and the right dealer.

ES


Quote from logic_man:

I'm not talking about common scenarios, I'm talking about common sense within the accounts of the 5% of traders who don't lose. If 1% of those 5% have their strategy stolen by their brokers, I'd be surprised.

Just go on believing what you clearly want to believe despite logic, facts and common sense.

One obvious fact from reading ET for about 7 months now is that posters who start threads like this one, about how nefarious cabal is out to screw the individual trader, and the posters who support the premises behind threads like this one are typically the traders who are not successful. The traders on ET who strike me as having a clue of what markets are about and how they work focus on just making market calls and noting the outcomes, understanding that it's a game of probabilities, while the ones who seem to constantly complain about their struggles are the ones who tout conspiracies. I'm sure that isn't a coincidence.
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Quote from ElectricSavant:

I read this thread as I recently discovered an automated way to make some money and I notice that these few edges that I have made... quickly stop working (perhaps I forward test in Demo too long). I always am chasing new edges. I wasted my time for many years with a bad a Forex dealer who smoothed their quotes and discovered maybe there was a way to make money in Forex with the right set up and the right dealer.

ES
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It's sad to see people dedicate so much time to non-issues. I guess that's one way the market separates the wheat from the chaff, though.

I've already shown, mathematically, that 99.9% of what makes a trade a winner or a loser happens AFTER you place the trade, not WHEN you place the trade. What part of that math is hard to understand? I'd recommend being far more concerned about what the traders who are going to comprise that 99.9% of the volume are going to do IN THE FUTURE than with what your broker is doing as you place a trade, whether he's trading with you or against you.

Speaking of which, since brokers are clearly supposed to be doing this sort of thing all the time outside of the watch of their customers, please explain why, if 95% of traders lose, brokers don't just fade the biggest losers, rather than copying the winners? With so many losing strategies to choose from, it would be like shooting fish in a barrel. And since losing is more likely to persist in the future than winning, it would actually be less risky to fade a losing strategy than it would be to copy a winning strategy.

Why do none of these obvious objections to the idea that brokers are stealing strategies occur to any of you?

Look at the posting history of any of the acknowledged "good" traders on ET. Do you see any worries about brokers stealing strategies, GS or Fed conspiracies, or any of the other tin-foil hat crowd's standard set of concerns? No, it's about market action and how to read and profit from it.

Again, this is not a coincidence, I'm sure.
 
Your point is well-taken.

You know I am reminded of a strategy that I tested that worked horribly...the graph was a nice smooth graph going down..

I got his idea to reverse the algorithm...well as you probably already know that did not work the way I thought it would...it lost too!

ES


Quote from logic_man:

It's sad to see people dedicate so much time to non-issues. I guess that's one way the market separates the wheat from the chaff, though.

I've already shown, mathematically, that 99.9% of what makes a trade a winner or a loser happens AFTER you place the trade, not WHEN you place the trade. What part of that math is hard to understand? I'd recommend being far more concerned about what the traders who are going to comprise that 99.9% of the volume are going to do IN THE FUTURE than with what your broker is doing as you place a trade, whether he's trading with you or against you.

Speaking of which, since brokers are clearly supposed to be doing this sort of thing all the time outside of the watch of their customers, please explain why, if 95% of traders lose, brokers don't just fade the biggest losers, rather than copying the winners? With so many losing strategies to choose from, it would be like shooting fish in a barrel. And since losing is more likely to persist in the future than winning, it would actually be less risky to fade a losing strategy than it would be to copy a winning strategy.

Why do none of these obvious objections to the idea that brokers are stealing strategies occur to any of you?

Look at the posting history of any of the acknowledged "good" traders on ET. Do you see any worries about brokers stealing strategies, GS or Fed conspiracies, or any of the other tin-foil hat crowd's standard set of concerns? No, it's about market action and how to read and profit from it.

Again, this is not a coincidence, I'm sure.
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Quote from ElectricSavant:

Your point is well-taken.

You know I am reminded of a strategy that I tested that worked horribly...the graph was a nice smooth graph going down..

I got his idea to reverse the algorithm...well as you probably already know that did not work the way I thought it would...it lost too!

ES
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But, in the case of the fading of a losing trader, a broker wouldn't even have to worry about reversing the algorithm, just enter the opposite side of the trade when the trader enters and exit when the trader exits. No "algorithm" involved, really. In fact, my guess is that most losing traders don't even use an algorithm, just their own gut (i.e. wrong) instincts.

Again, with access to the entry and exit information, why don't brokers do this? If they did, they would be on the winning side 95% of the time, over the long run, and become kings of the known world.
 
Here is a quote from an Oanda employee in another Forum...

No, that is incorrect. OANDA does not profit from its customers trading at a loss since we hedge our customers' aggregate positions. For example: If the aggregate customer position is $100M on the EUR, then OANDA will also be long $100M on the EUR. If the EUR goes up and the OANDA traders make a profit, then OANDA will make the same profit because it has (more or less) the same position. Alternatively is the EUR goes down and our traders have a loss, then we will have the same loss. (It is for this reason, that OANDA does not profit from customers' losses.)

We want all our customers only trade with a profit, because that would lead to increased trading, and thus increased volume and revenue for OANDA since we profit off the spread.
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I think that if your strategy is really worth trying to hide from brokers, it is going to be too complex for them to reverse engineer. Mirroring your trades could be a problem, but I'm pretty sure that is illegal and hard for them to do.
 
Quote from mcgene4xpro:

What are the tactics you will use to prevent brokers?
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No one has answered the OP's question yet.

To the OP:

The only way I know how to do this, is to trade your way out of Retail Hell, and then move to a real institutional platform. If the platform is truly institutional, it will offer the Iceberg Order Type, along with several other Order Types, to help you conceal your true position size, timing, and critical execution levels.

Here is a good place to start learning about it:

http://vcapfx.com/


If you don't want to use an EA (many people don't like them) and you are still in Retail Hell with no other alternative to trade on an Institutional Platfrom, then the only other viable option I know of, would be to find a Retail trading platform similar to ProTader, or something that will enable you to connect to multiple brokers through the same platform, and that enables you to build your own Currency Instrument to trade.

With this strategy, you can do a couple of things:

a) Distribute your margin across multiple Retail FX Brokers/Intermediaries.

b) Correctly match-up margin account types: $1k, $10k and $100k accordingly.

c) Create a single trading strategy to be executed across one or more of your FX accounts, using a custom index that you create containing only the currency pairs that want to trade - as just one idea.

When you submit a Pending Order this way, your broker cannot see it. I'm not quite sure if NinjaTrader also allows for this, but I'm sure that somebody with NinjaTrader experience can jump in from here.

Of course, you can always go the Excel/MT4 route with FXDialogue's Mexel Trader, where all of your trades are executed from within Excel, against your Retail MT4 account - of course, you have to learn how to use Excel.

Other than that, you are just going to have to pull yourself out of Retail Hell, or fund your way out of Retail Hell. Either way, you've got to get out of Retail Hell, as soon as practicable.

If you can go Institutional right now, I would always recommend the FXAll Trading Platform (you can see it from the link I provide above). If you are not planning a hedge fund and you don't want the hassles of Retail Hell, the FXAll is simply the place to be right now using a Prime Brokerage account.

There's one last option. You can also use Barclays BARX Trading Platform (this is also what I use). You'll need about $300k minimum to start, and you can also use Excel to place your orders through the platform. You can also execute on FX Vanilla Options as well, so you have a bigger range of flexibility when it comes to creating Defensive Trading Strategies. When coming in through Excel, your orders will be hidden as well.

Your concerns are very valid and I hope this helps a bit.
 
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