Keeping trading systems secret

[blueberrycake]

For a professional trader or a hedge fund, there is obviously nothing so valuable as the trading systems and methodologies that they use (particularly for quants). How do such companies go about protecting that information from getting out? Considering the amount of money involved, there is very strong incentive for employees to strike out on their own, and take some of the in-house research and ideas with them.

I dont see how you could prohibit the use of *any* knowledge gained in your employment. Besides, it seems next to impossible to verify if your proprietary ideas are being used after a person has left your company.

Does anyone have any direct experience with how the secrecy is maintained?

-bbc

 

[oddiduro]

Quote from blueberrycake:

For a professional trader or a hedge fund, there is obviously nothing so valuable as the trading systems and methodologies that they use (particularly for quants). How do such companies go about protecting that information from getting out? Considering the amount of money involved, there is very strong incentive for employees to strike out on their own, and take some of the in-house research and ideas with them.

I dont see how you could prohibit the use of *any* knowledge gained in your employment. Besides, it seems next to impossible to verify if your proprietary ideas are being used after a person has left your company.

Does anyone have any direct experience with how the secrecy is maintained?

-bbc

I have no experience here, but I would speculate that a system has imputs that a trader keeps in his head, and without those imputs, the system will fail.

What I mean by imputs is that there will be times when and when not to use a system, and some systems are also market specific, or timeframe specific. And if one does not know these intangibles, they will not be able to duplicate the success of the system, even if they have the base formulas.

Regards
Oddi

 

[GSCO]

There isn't a sytem in the world that will work in any market. Things change and so do systems. The only true profitable system is the person that changes his system in tune with the markets.

 

[easyguru]

Most successful speculators play a lonely hand. That is one way to keep system secret. Some like Crabel and Paul Jones have bought all their published material.

 

[Cheese]

"There isn't a system in the world that will work in any market. Things change and so do systems. The only true profitable system is the person that changes his system in tune with the markets." GSCO

Really. So sweet.

Oh, I'll just have to stop making money because you say so, won't I?

 

[Lovelitera]

I have been thinking about this topic long and hard because I intend to enter the biz again in some fashion.

I have decided that I will teach as many of my associates as I can everything I know and I hope that when I want to slow down a number of them will be qualified to treat my money well.

 

[Avalanche]

Quote from GSCO:

There isn't a sytem in the world that will work in any market. Things change and so do systems. The only true profitable system is the person that changes his system in tune with the markets.

True but what about "liquid" markets?

Abberation from what I understand trades profitably on about 40 commodities I think. It might be trading on more, but I think liquidity issues come in play in some markets.

I think the idea that small ranges beget large ranges and large ranges beget smaller ranges is pretty universal looking at bar charts at just about every market.

Obviously a S&P system isn't gonna trade copper maybe as well but there seem to be a few universal ideas that things are used as building blocks.

Almost every trend following system for example starts with some type of "volatility breakout", then they layer rules onto it for better or worse.

Actually I am suprised myself at how the rules/code of some of the more popular systems have not been spewed all over the web.

 

[easyguru]

Quote from Avalanche:




Actually I am suprised myself at how the rules/code of some of the more popular systems have not been spewed all over the web.

They are if you search hard enough. Almost all commercially available systems codes, secret are over the web. Even some of the most successful wizards have talked about their systems at some point or the other.

 

[vikana]

Quote from Avalanche:



Abberation from what I understand trades profitably on about 40 commodities I think. It might be trading on more, but I think liquidity issues come in play in some markets.

don't get too excited. He doesn't include roll-over in his performance data, which pretty much ruins it for many of the commodities.

 

[GSCO]

Whatever Cheese.

Like were suppossed to beileive you're the next Greorge Soros because you brag on an anonymous message board. HA.

How about you pose an arguement and actually contribute to this thread instead of using it as a sock to stuff your jock strap?