Quote from Thunderdog:
Yes. (Who do you think follows it?)
Perhaps the question should be "Have you yet written out you system in English to a level of detail that it could be followed by a total idiot <i>with absolutely no pattern recognition or intuition</i> for a week and not get screwed up"?
For instance, let's say you say "wait for a pullback to the 9SMA" that's not adequate. Exactly what is a "pullback"? Does price have to be above the SMA first? Exactly how many bars are too many, how many are too few? Can price be "too high", and exactly how do you tell? Does it need to be "gradual" and exactly how is this measured? Exactly how do you measure whether the pullback is too far? What values do you look at and how do you quantify them? Everything, absolutely everything, must be quantified - the computer only looks at numbers. If there is a pattern, you must distil it down to a set of numbers with specific cut offs. If you look at many numbers, then you need to take a weighted average or linear regression to arrive at a single number which has its own cutoffs. If you can trade purely from indicators (even if they're custom) without ever looking at a chart then you have the basis of a working automated strategy.
Everything, absolutely everything needs to be quantified.
It's this part which still screws me up. I think it's the reason why so many automated systems use off-the-shelf indicators even though manual traders think they're worthless. They may be worthless but they're precise and have specific numerical values which can be easily manipulated.
Getting back to your original question, how do you get programmers without losing your strategy?
You could start by finding a professional programmer rather than a professional trader. On the plus side, experienced professional programmers have come into many businesses and been given access to proprietary data and systems but they do their job and move on. Theft of data, processes or software across the whole US is vanishingly small and when it does happen it's often by external attackers or by competitors. There is a risk yes, but it's probably a lot less than you imagine. Programmers want to write code and generally don't much care about trading or other jobs, as long as they can make a living doing what they like, they're happy. The down side is that a professional developer may have next to no experience with the markets and could require some training to get fully up to speed.
You could try to find developers that have experience as a trader and as a programmer. These would have a lot more experience to bring, could speed up development but they're also the people that may have been thinking of doing automated trading on their own, increasing your risk. Talk to other people and look for recommendations. If you get any resumes from contractors, talk to references and see what they say. You want to find a professional who will respect your intellectual secrets. Often systems developers like NinjaTrader or TradeStation will have a list of developers who have done systems development in the past with good success. I've done some work with NinjaTrader in the past and I know that many (all?) of the developers of NT don't do any automated trading themselves. They enjoy the wages and security of their job and aren't looking to gamble in the markets. That's a big reason why EA can give programmers full access to their code, because they know the programmers want to program and not take the code to start a new business.
I do think that learning how to develop your own strategy is something that can be learned and no matter what, there is a risk that your strategy gets leaked & stolen. If not by your hired developer but by your broker, your computer repair man, or by some hacker that breaks your firewall. You should look at the risk/reward of each path. How much time and effort will it take to learn to develop on your own? How many bugs or oversights will your first effort have? What will the extra time and bugs cost you? If your strategy could earn $2k/day and a contractor can implement it in 15 days where you would take 90 days; if you risk a couple $1k losses from bugs with your contractor but a dozen from your own code, maybe the risk of intellectual property theft becomes minor compared to the real costs & risks of the alternatives.
How much is some extra confidence and time worth to you? What is the real cost if someone else is trading the exact same system as you are? If you're scalping illiquid stocks then maybe only a couple people can do it simultaneously but if you're trading liquid stocks or futures then you could have dozens or hundreds of people trading beside you without noticing it. If there is a high cost of development and the risk is low (just one more person trading beside you in a liquid market, worst case) then I'd say the choice is clear, take the risk.
Question for you, when you go out for dinner, what do you do to prevent waiters from stealing your info? With most things in life there is a risk but with some precautions the risk is worthwhile. Some people refuse to ever use credit cards to avoid possible fraud and have a low tolerance for risk. If you're one of these people then you need to develop the strategy for yourself. If you're comfortable giving your credit card away to people that you barely know, I'm sure you'd be able to do enough background checks to evaluate contractors and deal with the fallout should anything go wrong.
One thing to look for would be that you're hiring a professional who expects to earn their money through wages. This person won't be cheap, he won't cut deals. He will work by the hour or they will want detailed specs before quoting prices (that's not to steal your ideas, its to give you a better estimate). If this person talks partnerships, talks about giving you different rates if the strategy is profitable or acts like he's not in this for the long haul, run. Think of this like hiring an accountant - you will be sharing detailed, personal information with this person and most will be trustworthy but they should be in it because they really love accounting (development). Their passion should be development first and foremost. You do not want to hire a trader!
And for a final note, as someone that's developed over a dozen different automated strategies only to watch them fail, remember that this is much harder than you may think. It's an entirely separate niche of trading and you should expect the same ramp-up time (months/years, not days/weeks). I do have a couple strategies which are running live now and are nicely profitable but they are nothing like what I first started out to write. Other people have said this already but it's worth repeating: most automated strategies fail, even those we're sure will succeed. Bear that in mind as you think about how much time/money to invest and about how likely people are to steal it from you. This idea may be worth less than you think.
I hope it works though. It's a wonderful thing to get some profitable automated strategies running. It not only earns you money but time. I wish I'd started this years ago!
Good luck.
