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Can brokers steal trading concepts?
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Can brokers steal trading concepts?

  #1 (permalink)
Trading Apprentice
Sweden
 
Futures Experience: Intermediate
Platform: mt4
Favorite Futures: Forex
 
Posts: 7 since Sep 2012
Thanks: 5 given, 1 received

Can brokers steal trading concepts?

Hello fellow futures.io (formerly BMT)ers!

I have been pondering the following scenario. What if you have a solid trading style that makes you money and that is easy to follow and generates high probability setups. Lets say it is an easy breakout system. Your broker has all the information on how you enter, exit and manage your trades. If they see a customer making good returns do you believe they will try to study the customers trades and take advantage of the information? And if they do. Is it possible that the trading system leaks out, more people trade it, and it looses its edge? Or am I just being paranoid


Last edited by zktier; November 14th, 2012 at 10:05 AM.
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  #3 (permalink)
Market Wizard
Boca Raton
 
Futures Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
Favorite Futures: Futures
 
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zktier View Post
Hello fellow futures.io (formerly BMT)ers!

I have been pondering the following scenario. What if you have a solid trading style that makes you money and that is easy to follow and generates high probability setups. Lets say it is an easy breakout system. Your broker has all the information on how you enter, exit and manage your trades. If they see a customer making good returns do you believe they will try to study the customers trades and take advantage of the information? And if they do. Is it possible that the trading system leaks out, more people trade it, and it looses its edge? Or am I just being paranoid

Decent brokers are HAPPY for their customers when they do well. You are protected by privacy rules as far as your account so no is allowed to share/distribute your method. If your wins are consistent and last for a quite some time, it is not uncommon to be approached by your broker to see if you would like to become a CTA and get some guidance from there.

Since your question started with "what if...." I think you should build it first and focus on that.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #4 (permalink)
Elite Member
@ Germany
 
Futures Experience: Beginner
Platform: NinjaTrader
Broker/Data: Mirus Futures/Zen-Fire
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Protection

It's never wrong to be paranoid in that matter. I don't think that anybody can easily grab your strategy from simple watching the executions. But the attackers can do front running your trades. The main attack surface are the binaries of your strategy.

I've wrote down a few security aspects here:

https://futures.io/platforms-indicators/23904-new-algo-trading-platform-rizm-equametrics-com.html#post273647

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  #5 (permalink)
Trading Apprentice
Sweden
 
Futures Experience: Intermediate
Platform: mt4
Favorite Futures: Forex
 
Posts: 7 since Sep 2012
Thanks: 5 given, 1 received

For the sake of argument. If you are dealing with an unethical broker that somehow figure out the core of your strategy and is using that information to make their own trades. Would that change the market structure? I am thinking that the broker want to keep that information a secret and prevent more people using that edge.

An real example might be the turtle method. When that became official did the edge disappear or did it not change the market structure in any real sense?

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  #6 (permalink)
Trading Apprentice
Indianapolis, IN
 
Futures Experience: Intermediate
Platform: North-American Derivatives Exchange
Broker/Data: Forexpros
Favorite Futures: forex binaries
 
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Posts: 38 since Nov 2012
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zktier View Post
Hello fellow futures.io (formerly BMT)ers!

I have been pondering the following scenario. What if you have a solid trading style that makes you money and that is easy to follow and generates high probability setups. Lets say it is an easy breakout system. Your broker has all the information on how you enter, exit and manage your trades. If they see a customer making good returns do you believe they will try to study the customers trades and take advantage of the information? And if they do. Is it possible that the trading system leaks out, more people trade it, and it looses its edge? Or am I just being paranoid

I've been wondering the same thing, and I am definitely paranoid.
Which is why I don't use a broker.
I trade directly on an exchange platform.

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  #7 (permalink)
Market Wizard
Boca Raton
 
Futures Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
Favorite Futures: Futures
 
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Posts: 2,046 since Sep 2010
Thanks: 1,918 given, 2,750 received
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lili View Post
I've been wondering the same thing, and I am definitely paranoid.
Which is why I don't use a broker.
I trade directly on an exchange platform.

This is not a shill for some binary FX options. nope it is not.

ok, so you compare some exchange like a Binary FX for retail flow with market makers that can move any way desired versus some one like the CME with institutional flow ?

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #8 (permalink)
Trading Apprentice
Sweden
 
Futures Experience: Intermediate
Platform: mt4
Favorite Futures: Forex
 
Posts: 7 since Sep 2012
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lili View Post
I've been wondering the same thing, and I am definitely paranoid.
Which is why I don't use a broker.
I trade directly on an exchange platform.

How does that work? I mean on what type of exchanges is it possible to bypass the brokers?

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  #9 (permalink)
Trading Apprentice
Indianapolis, IN
 
Futures Experience: Intermediate
Platform: North-American Derivatives Exchange
Broker/Data: Forexpros
Favorite Futures: forex binaries
 
lili's Avatar
 
Posts: 38 since Nov 2012
Thanks: 14 given, 21 received


mattz View Post
This is not a shill for some binary FX options. nope it is not.

ok, so you compare some exchange like a Binary FX for retail flow with market makers that can move any way desired versus some one like the CME with institutional flow ?

oh no, don't get me wrong!

I don't know enough about anything to compare.
I'm just talking about my (very personal) paranoia - I don't trust anybody but myself, and even myself I trust only so much (very little, actually).

So, what I'm saying is: I prefer to do business (any kind of business) directly, by myself, using only minimal resources, and without intermediary/middleman/broker - just so that I can still sleep at night.

One more thing - with regards to the "shill" - I have absolutely no intention to attract any kind of attention towards the tiny market niche that I may (or may not) have discovered for myself. I completely support everybody's attempts of finding their own path to happiness, even if they want to walk down a path that I would never even look at.

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  #10 (permalink)
Trading Apprentice
Indianapolis, IN
 
Futures Experience: Intermediate
Platform: North-American Derivatives Exchange
Broker/Data: Forexpros
Favorite Futures: forex binaries
 
lili's Avatar
 
Posts: 38 since Nov 2012
Thanks: 14 given, 21 received



zktier View Post
How does that work? I mean on what type of exchanges is it possible to bypass the brokers?

For me that was the hard part - find an exchange that lets us little people act as their own retail traders.

I'm so inexperienced in this business that it took me a month to even understand the difference between an exchange and a broker

just in case you are a little thick in the head, like me, here it is again:

Quoting 
An Exchange is the direct authority where the direct trade execution happens and where as the Broker (dealer) is a service offered by firms to their clients in trading the securities by acting as a medium with the Exchanges and charging the commissions is return


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