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There are some subtle points that most people who are in the business of making money with other people's money are not aware of.
Information in the money business is price inelastic, i.e. you do not sell more by lowering price. Knowledge is what drives the money making business. Knowledge per se has no physical borders, barrier to entry. A money manager who has $10,000,000 to invest in can take the same strategy that a manager who has $1,000 to invest in and both can apply the same strategy successfully. The $10MM manager makes 10% just as the $1000 manager. The $10MM manager makes $1,000,000 and the $1000 manager makes $100. Both made the same return using the same strategy, yet one is $999,900 better off than the other. With such a spread between the two managers, the money manager with more money can pay more in absolute dollars for the information than the one who has less money.
And if you are the one who has the strategy, I would think you would want to offer it to the bigger money manager.
This being the case, why try to sell proprietary information to those who can pay a small amount when you can sell to those who will pay more? In this case, also, the requisite cost to convince a bunch of little money managers the strategy works when you can pitch one huge fish out there that he would be better off, would be too high.
So, the need to keep the trading algorithms secret doesn't fall into a neat supply/demand formula. It's more like an all-or-none dynamic.
The idea of trading the secret code for oneself also begs the obvious question: how can you make millions with it when you only have thousands to trade with? No money manager alive, or even dead, ever made it with only his own money. They've always applied leverage to maximize their absolute dollar returns by bringing in investors. Templeton, Soros, Dennis, even Livermore when he was broke and had to borrow money from his broker to get started again ... time and time again.
The fallacy with your thinking is as follows. Just because you have a successful strategy doesn't mean that you will make millions or billions. You must have a successful strategy AND millions at your disposal to make the millions or the billions. This is the reason why you and millions of people in the world trade the liquid markets to make millions more. ALL OTHER BUSINESSES HAVE THEIR NATURAL BARRIERS AND LIMITATIONS TO THE AMOUNT OF MONEY YOU CAN MAKE. If you were to create a factory to make a product you will find that your limitations to the amount of products you can make are there: the factory is not big enough, there isn't enough raw materials, etc., etc. The limitations to liquid tradeable markets are much higher. One phone call to your broker and you can make a trade for 100 shares. One phone call to the same broker and you can make a trade for 1,000,000 shares. There is no natural barrier to making money in the markets. The only barrier is ... the amount of capital you have to make the trades ... and that is all. (Note I did not say to make a SUCCESSFUL trade, but just to make a trade .... the successful trade part comes in with the strategy that one can develope using Tradestation and manage to keep it secret.)
Just my two cents of rambling thoughts.
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In a message dated 8/11/2003 5:17:04 PM Central Daylight Time, TSOKAKIS@xxxxxxxxx writes:
Subj: [amibroker] Re: Saving AFL with proprietary coding?
Date: 8/11/2003 5:17:04 PM Central Daylight Time
From: TSOKAKIS@xxxxxxxxx
Reply-to: amibroker@xxxxxxxxxxxxxxx
To: amibroker@xxxxxxxxxxxxxxx
Sent from the Internet
But, the other, who will copy it infinitely and probably sell it, he
will sell an open code.
Sales need more talents than a hidden code.
Perhaps it is better to trade the "golden" code.
You can make more money this way and you will not disturb the
hackers, they will apply their talent somewhere else.
Just some thoughts...
Dimitris Tsokakis
--- In amibroker@xxxxxxxxxxxxxxx, fujeira@xxxx wrote:
>
>I would like to develop special proprietary coding using AFL files
for
>Amibroker and make it so that no one can see the code. I can sell
it without
>worrying that someone might copy it infinitely.
>
>Is there a way to do this? I know Tradestation has this feature.
Metastock
>does not. What about Amibroker?
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