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The sharing/not sharing dilemma
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The sharing/not sharing dilemma

  #11 (permalink)
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trendwaves View Post
This really is a conundrum.

On the one hand, this is one of the most competitive endeavors we can undertake. The markets are highly efficient, meaning to find and then sustain a mathematical edge is really hard to do. So, if I invest my resources (time, intellect/experience and money) into developing a legitimate edge in the market, how does it benefit me to freely hand that out at the front door like Halloween candy ?

I guess it depends on your definition of an edge.

What if it means simply being better than other people at it?

Take golf - by your definition, there would be no golf teachers because why hand out the techniques if it means others will be good at it?

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  #12 (permalink)
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trendwaves View Post
This really is a conundrum.

On the one hand, this is one of the most competitive endeavors we can undertake. The markets are highly efficient, meaning to find and then sustain a mathematical edge is really hard to do. So, if I invest my resources (time, intellect/experience and money) into developing a legitimate edge in the market, how does it benefit me to freely hand that out at the front door like Halloween candy ?

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?

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  #13 (permalink)
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DionysusToast View Post
I guess it depends on your definition of an edge.

What if it means simply being better than other people at it?

Take golf - by your definition, there would be no golf teachers because why hand out the techniques if it means others will be good at it?

Agreed.

My definition of an edge is the ability to sustain a positive expectancy.

All of the 'golf teachers' I have met are former pro / semi-pro golfers. Meaning they are no longer on tour earning a living from playing professional tournaments. They are paid by the course/members to teach golf, they are paid golf instructors. I have never met a golf instructor that spends hours a day at the course teaching golf for free. It has been my experience, especially so here in Florida, there are a lot of folks out playing golf every day, but out of all those golfers, many of whom had private golf lessons and use the best equipment money can buy, not many are scratch golfers as a result.

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  #14 (permalink)
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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?

I think John Grady isn't 'sharing' his method for free, I think he is selling his method to paying students. In terms of the markets Mr Grady is teaching his students to trade in, the huge liquidity of those markets would negate the effect of a handful of retail traders acting on some special order flow signal. But in theory, if one were to have the ability to push 1000's of contracts per minute into the order flow it could have that temporary effect, in a hypothetical sense. By no means do I believe Mr. Grady has that capacity in the real world.

I think Mr. Grady's statement is directed at answering a different underlying question, that being: If your method is so good, why are you 'sharing' it (selling it) to the public ? Why not keep it secret and make $$$$ Millions from the market for yourself ?

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  #15 (permalink)
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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.

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  #16 (permalink)
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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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  #17 (permalink)
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Nothing


trendwaves View Post
When someone freely shares their valuable work on a forum of this high level of public visibility, what is to stop a business enterprise from "monetizing" that contribution for their own enrichment (meaning a vendor who steals and markets (sells for profit) the indicators, strategy, or trading concepts/method).

Apparently there is nothing to stop someone from doing that.

Remember Beth?

Came in here, pulled heart strings, oh poor me i am working so hard, please help blah blah blah...

A lot of people helped her out and held her hand. I don't know if she could trade or not. She must make more money selling her indicators than trading.

Next thing you know she is flogging the stuff she got from others for money as a vendor.

then Beth and Nelson Fiedler ends up on Dragons Den no less.

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  #18 (permalink)
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mmaker View Post
Apparently there is nothing to stop someone from doing that.

Remember Beth?

Came in here, pulled heart strings, oh poor me i am working so hard, please help blah blah blah...

A lot of people helped her out and held her hand. I don't know if she could trade or not. She must make more money selling her indicators than trading.

Next thing you know she is flogging the stuff she got from others for money as a vendor.

then Beth and Nelson Fiedler ends up on Dragons Den no less.

Yep we could go on all day listing the examples. The bad thing is, the folks that helped her and
freely gave her those proprietary indicators, once burned are going to be a lot less motivated to take
a chance again and put their stuff out there for free next time. The problem Beth and those like her
are now facing is, all that advanced code is stuck on NT7, best of luck migrating it to NT8. Not to mention
all the new innovation possible with NT8, good luck finding any of that for free now.

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  #19 (permalink)
 
 
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trendwaves View Post
Yep we could go on all day listing the examples. The bad thing is, the folks that helped her and freely gave her those proprietary indicators, once burned are going to be a lot less motivated to take
a chance again and put their stuff out there for free next time. The problem Beth and those like her
are now facing is, all that advanced code is stuck on NT7, best of luck migrating it to NT8. Not to mention
all the new innovation possible with NT8, good luck finding any of that for free now.

I was discussing along these lines with a developer last week getting some personal suff ported.

Ninjatrader Ecosystems is kind of a toxic swamp, the CTFC possibly using it as a to-do list. Doing stuff with Ninjatrader seems like being a dog with a bad master (intentional FIO dog pun there). Ray just seems to be very lackluster or distant but I guess they have largely been interested in noobs/marketshare so why bother.

The NT7 to NT8 conversion thread is drawing little interest from the usual faces of competent developers here. Why bother help Ninjatrader for free when they are just so grey. I would do stuff for Mattz maybe as he contributes well sometimes but not NT.

I ended up saying to this C dev (he has plenty of work, honest man, but conversions and new functions are easy filler for him) not to bother offering a service for NT8 on FIO. He is just likely to have trouble with novices who do not know how to spec software or cannot defferentiate between bad code and a bad idea. Some will very likely not value the work or treat him professionally if for example someone who works for free chimes in that xyz could be done differently or better (shock horror). Appearing in Ecosystems lately could even backfire.

Regarding sharing trading systems, I drop hints and give clues to what can be done fairly often but as has been said so many times, if you have not invested your own ingenuity you will fail. I try to dogwhistle maybe (more dog stuff) to the brighter people who need a little inspiration.

Guru hunters who will do anything but trust and take responsibility for their own original decisions are dispiriting to spoon feed. They think a lot but mostly about how to get someone else to do the thinking for them.

Reminds me of metacognition "thinking about thinking" and thats a bad sign that I am writing this post

https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect

Now of course they won the Ignoble prize for another paper but I recon that shows their genius.

(Ok Im a bit moody today haha, need more exercise)


Last edited by Rory; November 6th, 2016 at 12:50 PM.
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  #20 (permalink)
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I think the underlying question first would be whether a firm or trader actually knows how they 'manufacture alpha', or worse can they distinguish between alpha vs beta?

At a high level, no one climbs Mt. Everest by themselves. It's always a team effort. There will inevitably by some degree of information share between teams. However, real alpha generation techniques being shared between competing firms? Quite unlikely. It is more likely they max out a fund trading that alpha until it disappears and simply close off that fund to more new money.

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