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The sharing/not sharing dilemma

  #16 (permalink)

Sydney Australia
Trading Experience: Beginner
Platform: CQG,NinjaTrader
Favorite Futures: Oil, ES, Bund, Currencies
teee's Avatar
Posts: 47 since Nov 2014
Thanks: 134 given, 101 received

TWDsje View Post
Whether or not you share your money making methodology depends on the methodology itself.

There are some strategies that by their very nature only a limited number of market participants can take advantage of successfully. For instance, only so many people can take advantage of a strategy that relies on being first in the queue. You keep this kind of strategy to yourself because more competition reduces your chances of executing the trade successfully. These kinds of strategies also tend to be the most reliable money makers, and are thus the ones that we are always looking for and not finding.

On the other end of the scale there are strategies that by their very nature are more successful the more people you have using that strategy. For instance, the more people that participate in a momentum trade the higher and faster that trade is likely to go. These are the kinds of strategies that people will share. However, they also tend to be strategies that are not as reliable, and require skill to use successfully.

My view too, some strategies are definitely commercial secrets. I believe most of these involved use of spreading/hedging/arbitraging, taking advantage of the inefficiency of certain market structure.
For the general strategies that are by nature snowballs their success rate with increasing amount of followers, they fall into one of two categories, one is named mean reversion and the other one is named trend following. In the technical analysis world they are the two religions fighting for followers.

xplorer View Post
What do you think about what John Grady says, i.e. that by sharing your edge/methodology the chances of your own trade being successful increases because more people try to push the market your way?

Until John spread his strategy to a trader base that is significant enough, it will only accounts for an extremely small proportion of the market force which is very unlikely to cause the self-fulling prophecy to kick in.
I feel this is more or less a reason to legitimize the behavior of selling methodology. All methodology vendors get asked why are they selling their edge when they can just monetize those edges straight from the market and they need a legitimate answer to convince the buyers. Just like buying a second hand car, people prefer to hear that the owner is selling the car cheap because they are moving overseas or running into liquidity problems. I believe its a human bias that people actively look for reasons to justify the legitimacy of free lunch.

I'm not against John Grady or any other methodology vendors/sellers because I think they provide good materials for starters (or even intermediates) in speeding up their learning curves. I myself had purchased John Grady's material a few years ago and thought it was a great help. Just like reading any trading books, the important thing is to find the pearl that stimulate your thinking instead of take in any idea/methodology/concept as face value.

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