Securing successful strategy from the broker stealing it

I have to agree with Sig on the point of the chances of it are low (but as henry76 said - they are not zero). Naive and not naive - are somewhat subjective terms - different in each person's brain (nothing wrong with that).
HOwever, chances are indeed not zero, and the more your account grows - the higher than chance.
IF there was some simple "trick" I am not thinking about (like dividing orders between different brokers, etc.), and it would eliminate that even 0.1% chance of it happening - hey why not? It's all about effort/gain ratio.
 
yoyotrader said:
I have to agree with Sig on the point of the chances of it are low (but as henry76 said - they are not zero). Naive and not naive - are somewhat subjective terms - different in each person's brain (nothing wrong with that).
HOwever, chances are indeed not zero, and the more your account grows - the higher than chance.
IF there was some simple "trick" I am not thinking about (like dividing orders between different brokers, etc.), and it would eliminate that even 0.1% chance of it happening - hey why not? It's all about effort/gain ratio.
More...
Let's say there's a .1% chance of it happening. And let's say that if it happened it would cost you $1M. The expected value of that is $1,000 ($1,000,000*.001). What is the cost of just setting up 2 brokerage accounts, programming for 2 brokerage accounts and tracking 2 brokerage accounts and doing the accounting for 2 accounts? If you value your time at just $200/hr then if you spend more than 5 hours on that in total you're wasting your time right? And that's before we add in the probability times cost that the extra complexity of 2 accounts causes you to make an error or take an extra few seconds and miss an opportunity, either of those will chew through your $1,000 pretty fast as I'm sure we've all experienced.

BTW, .1% chance is pretty high. That would mean that on average this happens with 1 out of every 1000 customers of a brokerage. Or in other words, Schwab has 12M customers so this is happening to 12,000 of them? Seems unrealistically high to me, if you extrapolated to the entire industry it would mean this was happening to literally millions of customers. If you used a more realistic number, like .0001% (leading to 12 customers experiencing this as Schwab) then the expected value of your loss, going to the first example, is a whopping $.10.
 
Haha, I knew that if you were a pro trader - you would catch that 0.1%. Agree it is high.
The 0.1% is adjusted to the subset of customers whose gain per year is > than 99.9% of customers, so effective total customer percentage would be a few extra zeros after period. But good catch. Just for the extra math giggles - you multiply it by very low chance of them being caught by me, and you could effectively get into billions in terms of risk/reward ration. Complicated, a lot of assumptions, and estimates. That's why I am not dipping in the math, just looking for a simple idea implementation of which is minuscule and could avoid potential frustration in the future.
Unfortunately my marginal cost of time is 4-figure per hour (not bragging, just stating for the fact), but I don't quantify it when I have interesting discussion with interesting people. I dip in forums as I stumble on some brilliant ideas once in a while that has changed a lot for me
But your mathematical analysis is THE kind of answers and people I thrive on and looking for, though "out of box" general ideas can be worth many millions too.
 
virtusa said:
So what you basically say is: if he made enough money it is no problem that they can steal his “intellectual property”? What if he wants to make more money, what is enough? Will the criminal decide for him what is enough? What if he wants his children to continue his trading? Shouldn’t it be HE who decides what happens with HIS “intellectual property”? No matter if HE is dreaming or not, because that is irrelevant.
More...
No I didn't say that. I just said if you had a system worth stealing you probably had already traded it successfully. Why else would anyone notice it?

But you are right. There is not much you could do if someone wanted to steal your system. I don't know how you would copy-right a trading system. About the best you could do is write a book.

Question is: is it normal that people steal something from you that you consider valuable for yourself, no matter if it is really valuable or not? Is it up to the criminals to decide what you can have or not?
More...
Pretty well. That's the thing with criminals, they don't obey the law.

When it comes to big money, refer to the Golden Rule; "The guy with the gold makes the rules".


Why is there always so much fuzz about China not respecting IP of US companies? These companies made already enough money according to the above used logic.
More...
Why would china care about US IP? The copyright doesn't apply in china?
 
yoyotrader said:
Unfortunately my marginal cost of time is 4-figure per hour (not bragging, just stating for the fact), but I don't quantify it when I have interesting discussion with interesting people. I dip in forums as I stumble on some brilliant ideas once in a while that has changed a lot for me
More...

I've always wondered when someone on investing forums post their high returns (are there many, are they selective) or how do they calculate their time value.

for the day traders like yourself as an example, likely doing some great wins, factoring in all the wins & losses mth over mth, bottom line net after commissions, time spent on your trading desk ... is your time value spent in $/hr income (net after commissions) better than a minimum wage job or as high as one of those Wall St hedge fund managers?

on a flush, take anything or everything in between opening an account, funding it, trading it, what was the outcome - profit is what counts, your take home pay & if its negative, then betting is a losing game.
 
Last edited:
henry76 said:
Sig I think your being naive , I suspect many brokers have people secretly following /accessing information on very successful trading accounts , could be anyone , directors , technicians, if there's a lot of money involved stuff leaks .
More...

You mean like copying the most successful traders & accounts on eToro and making millions of $$$???
 
Sig said:
Let's say there's a .1% chance of it happening. And let's say that if it happened it would cost you $1M. The expected value of that is $1,000 ($1,000,000*.001). What is the cost of just setting up 2 brokerage accounts, programming for 2 brokerage accounts and tracking 2 brokerage accounts and doing the accounting for 2 accounts? If you value your time at just $200/hr then if you spend more than 5 hours on that in total you're wasting your time right? And that's before we add in the probability times cost that the extra complexity of 2 accounts causes you to make an error or take an extra few seconds and miss an opportunity, either of those will chew through your $1,000 pretty fast as I'm sure we've all experienced.

BTW, .1% chance is pretty high. That would mean that on average this happens with 1 out of every 1000 customers of a brokerage. Or in other words, Schwab has 12M customers so this is happening to 12,000 of them? Seems unrealistically high to me, if you extrapolated to the entire industry it would mean this was happening to literally millions of customers. If you used a more realistic number, like .0001% (leading to 12 customers experiencing this as Schwab) then the expected value of your loss, going to the first example, is a whopping $.10.
More...

your base is the number of total customers, which is wrong. no one has interests in a failed account. profitable accounts may be only less than 5%.
 
Sig said:
Let's say there's a .1% chance of it happening. And let's say that if it happened it would cost you $1M. The expected value of that is $1,000 ($1,000,000*.001). What is the cost of just setting up 2 brokerage accounts, programming for 2 brokerage accounts and tracking 2 brokerage accounts and doing the accounting for 2 accounts? If you value your time at just $200/hr then if you spend more than 5 hours on that in total you're wasting your time right? And that's before we add in the probability times cost that the extra complexity of 2 accounts causes you to make an error or take an extra few seconds and miss an opportunity, either of those will chew through your $1,000 pretty fast as I'm sure we've all experienced.

BTW, .1% chance is pretty high. That would mean that on average this happens with 1 out of every 1000 customers of a brokerage. Or in other words, Schwab has 12M customers so this is happening to 12,000 of them? Seems unrealistically high to me, if you extrapolated to the entire industry it would mean this was happening to literally millions of customers. If you used a more realistic number, like .0001% (leading to 12 customers experiencing this as Schwab) then the expected value of your loss, going to the first example, is a whopping $.10.
More...

Damn Sig,

How much time did you spend on calculating that ???

wrbtrader
 
this is an email I received from IB:

"This is the second notice being sent as a result of excessive order activity being submitted by your account XXXXXX. As noted in our original communication, IBKR routinely monitors the level of order activity relative to orders executed and prohibits accounts from consuming system resources at an inefficient level."

the IB asked me to explain what I was doing and how to modify my order management.

IB technical person apparently looks into any order your submit. if he is curious, he can copy your order and give to his friends, or himself, and study your strategy.

those we think technical persons at Broker firms will not do such things are naive.

I still remember 5 years ago, one of my friends gave me a file which included all entries and exits of trading records. he told me the records came from a very profitable trader and asked me if I could figure out how the trader did it. My friend is not a broker(she is a trader). the file came directly from broker firm according to her information. So I guess besides me at least quite a few other traders also got the file.
 
Last edited:
You must log in or register to reply here.
Back
Top