Hey All,
What do you think about freely giving away knowledge that you have worked very hard and very long to attain. Do you believe that if more and more people know your strategy that it will eventually become obsolete if an increasing amount of people adopt it? I myself feel free to discuss the basics of my method but guard closely the real secrets in the sauce since that is my edge. I have heard that the more people use your same method the more competition you have and the less money you have the opportunity to make? So do you feel your trading knowledge should be guarded as a trade secret as to keep in check the amount of traders competing with you? Don't get me wrong, I know how good it feels to the ego to be the one discussing the system that consistently makes money, but what is good for your business? Would Apple Computers lift their patents just to show everyone the genius behind the design of the Macbook Air? Would publishing companies expel their copyrights just to provide everyone with a book everyone should read?

The original owner of The DeBeers diamond company was a success until others began to observe that success and attempt to do the same thing. Many new diamond mines were discovered by these copy cats and began production all because Mr. DeBeers demonstrated the legitimacy of the business. We can all imagine what happened to demand at this point. So he threw into action a plan to monopolize the industry and again manipulate supply so it could be in perfect harmony with demand, thereby garnering maximum monetary efficiency out of every diamond.

If we give away our trade secret there is no way to get it back... any thoughts?

Great question and one that is going to have to be addressed at some point for the Informed System Project as well.

For me personally, this is a question that I could answer yes to, I could answer no to, and I could give differing strengths of yes and no's depending on the exact specifics of the situation.

To formulate an answer I think the first thing that I would want to know is how systematic or discretionary the strategy is. Without knowing anything else, I would say that the more systematic a strategy is, the stronger the argument is for keeping the strategy a secret, as pretty much anyone can take the parameters of a completely systematic strategy and generate the same results as the developer does.

On the other side of this, the more discretionary a system is the less important it is to keep the strategy a secret. My reasoning here is that the more discretion involved, the more the individual who is pulling the trigger on the trades is going to affect the results, so the likely hood of someone being able to copy, or trade against the strategy, decreases as the discretion of the strategy increases.

The second thing I would want to look at here is how much money is being traded behind the strategy. In general I think that small traders pay way too much attention to things such as this, as most people do not have the trading capital to place large enough trades to where they are going to show up on anyone's radar anyhow.

The larger a trader becomes however, the more likely they are going to start showing up on people's radar's, and the more likely that things are going to happen which would negatively influence the results of the strategy, if people were to find them out. This is why from my experience, many large traders and institutions use specialized execution methods to hide their order flow, so the market does not take notice.

The third thing that I would want to know is the liquidity of the market they are trading. This feeds back into number 2 as the less liquid the market the less size that a trader is going to be able to do, before he or she enters the market and people start to take notice.

Fourthly, I would want to know the broad category of strategy that we are talking about. As an example here, one can trade much less size in a short term strategy than they can a long term strategy, without popping up on the radar. The same goes with a reversal strategy vs. a strategy which builds into trends.

So these are some of the things that I would think about when deciding how much or how little of a strategy I would consider divulging to the public.

As to the specific answers listed below on apple and publishing companies I can argue the side you have argued below that it would not be wise for these companies to give away their trade secrets. I can also however make the argument that there are ways for them to profit, potentially even profit a lot more, by giving away all their innovations. A great example of this would be IBM who is one of the leaders in open source development, and has given away hundreds of its patents to its open source community. By doing this they increase the number of people working on their projects many times over, which fosters much greater innovation and significantly lowers costs at the same time.

I think this "power of open source" is what Houssam was trying to leverage when he started the Informed System Project, basically hoping here that by leveraging the collective power of the InformedTrades community, we can build a better strategy than any one person could build by themselves.

Sorry for the long response this is a great question and one that I would love to hear more from you and others in the community on.

Best Regards,
Dave

__________________
Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.

i think it is advantageous to look for how sharing information can help you. with regards to a developed system, how can you share information for your benefit? here are some ways:

1. share information and encourage others to make improvements and share their thoughts
2. use it as an advertisement for something else; for instance, you can give your system and sell trade execution services, or mentoring for the system
3. use it to earn "goodwill"; sharing information is a good way to earn trust, which can be monetized in many ways down the road. the adage, "it's not what you know, but who you know" comes to mind.

i personally think reason #2 will lead to most non-personalized, mass marketed media to be free, though it is going to take some time; i feel we are in a transition phase between the property rights knowledge economy and the open source knowledge economy.

Hi there all very good question here...
i guess what we are doing here is not giving any secrets we are just helping giving hands to who ever needs it and by talking about the informed system project the thing we started here in this community we also didn't give secrets we shared knowledge we made a system that might or might not work and this is a good point here which is we didn't reveal any secret technique right??
so what i mean to say is that i am with sharing my knowledge and my experience with any one who needs despite the sum of knowledge i have...but when you say if we gave away our secrets we can't get it back well i guess no one is giving his secrets here i mean no body asked you : (give me your strategy i want to trade it) am i right what people are doing here is asking general questions and we answer them....
and as Dave mentioned yes i am with the OPEN SOURCE after all if we didn't find anyone to ask we wouldn't be here we would be in any other profession
i'm sorry but i don't really know your name so excuse me Shootanappleoffmyhead if you didn't find anyone to instruct you through your way in trading how would you know what you know now and when it comes to me and for this particular reason i owe for the people who taught me what i know now and what i am going to know in the future is to teach other people i mean no body has posted all these free information on the net so other people can save it for them selves are you with me here hope you are..
so i tell you again what we are doing here or in any other place is only giving a hand so people can make there own secret and teach other people...... what i think is we are doing a great thing here and i enjoy it for me this is what i think and what i believe is happening here .....if any one disagree please tell me
best wishes
Houssam...

I am now realizing the political incorrectness of my question posed to a website dedicated to sharing trading information and experiences. I realize that if you say, "Yes, it is not a good idea to share your best info." Then you mongrelize your purpose and butcher your efforts. I am not insinuating this to be the sole reason for your rebut, but I can smell the influence.

I asked myself if we as profitable traders should seek to replicate ourselves into the 10% club, which would be not as fulfilling for the ten percent as it would be for the 90%. I am just thinking that it is not good for the 90% to try and fit into the 10% space. Just imagine this. What if all profitable and successful traders taught everyone else how to trade well. What would happen to the market?

Hey there and thanks for your fast response well if you had came to this point then the answer is now gonna be from a psychological point i mean with all theses sources on the internet all these videos why there are still 90% of the trades losing the answer is simple because of the human psychology because 99 % of those 90 % lack the ability to sit and lean and even if they do they stop pretty soon and one other thing i guess is the reason is because in my opinion about 80% of these traders got into this type of trading because they think it is a moneyline because they think it is the quickest road for becoming millionares and when they read that it would take them years to profit they don't believe and they start trading right away even though alot of usefull infos were infront of them and when they lose they stop trading they don't go back and read what they have firstly ignored did you get me here....this is the human thoughts no matter how centuries will past there will be 90% and 10% not only in trading but in many aspects of life so even if you taught your secrets only about 0.01% of those 90% will get the discipline and the patience to sit and learn and those can fit them selves into the 10% very easily and there won't be problems with that i know i went a little too far with this but i guess this is the only explanation why there is 10 and 90 in this world which is i like to call it the human psychology and the way humans think
best regards and hope to hear your debate soon
Houssam

haha. I personally thought your question was a good one that is just the type that generates good discussion and debate. It is these types of questions and debates that in my opinion make a great learning community, so I encourage you and everyone else to feel comfortable speaking your mind here about anything related to trading.

I personally feel that there are few "secrets" to profitable trading. In my opinion most if not all of the information one needs to trade profitably is out there (and with the internet mostly for free) if people are willing to look for it, and have the intelect and work ethic required to learn it. With this in mind, while I agree that it would help some if every profitable trader mentored others in their methods, in my opinion I don't think this would change the trading landscape that much because:

1. The fact that there were all these mentors out there would draw more people to the market.

2. The large majority of people would not have the intellect, and/or would not be willing to put in the work required to learn and follow the methods taught, just as the large majority do not now.

This question in my opinion, is seperate however from keeping the intricut details of a strategy secret. Here in my opinion if the strategy is descretionary the profitability of the strategy will not be affected by disclosing the broad concepts that are behind most discretionary strategies as trader personality plays such a large role. If it is systematic then if the strategy has enough money behind it to be on the radar, then in my opinion profitability will suffer as a result of disclosing the strategy, and therefore the details would need to be kept secret.

This is why as I pointed out in my first post that this is also a good post for the Informed System group to think about, as the relative privacy of the strategy once the finer details are worked out will need to be decided. So one more reason I think this is a good post to continue debate and discussion on.

Best Regards,
Dave

__________________
Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.

Dave,
Superb first point. Well, I just wrote this ginormous reply but it got erased so I'll just outline my ideas for now.

1. It is good to get more traders into the market, but where are the ethical boundaries regarding why we are trying to get more traders into the market?

Let the truth be known, the very success of profitable traders is married to the very failure of unprofitable traders.
It is my experience that men can be cunningly enterprising with issues like this. As we see demonstrated rampantly in our healthcare industry's focus on profit margin rather than the well being of the American People. A classic example suggesting moral/ethical issues can be bought.

So what would make the harvesting of dumb money any different?

2. So let's say that we did decide it was a great idea to just freely share our ideas and secrets with just about anybody. Is this really what neophyte traders need? Doesn't he/she need to embark on his/her own pilgrimage and learn his very own system based on what works best with his personality?

Truthfully, I'm almost glad so many traders never shared their secrets with me, because I may still be bouncing from one "great" trading plan to the next, becoming very confused along the way.

3. This question is for Dave. As stated in the classic Wealth of Nations by Adam Smith, ours is an economy based almost entirely on self interest. For example, if I am selling you something my pitch will not include information about how I will be able to feed my face with your commission dollars. My pitch would have more to do with how my product will benefit you.

The very name of this website is "Informedtrades.com"

How do you yourself benefit from helping inform traders? (please refrain from the intangeable "personal satisfaction" pledge.)

All good points and feel free to write as much as you want as, at least in my case, I am thoroughly enjoying your thought provoking posts.

1. Here are a few thoughts on this one:

- I would say that trading is different from health care and the like in that health care is a necessity, where trading is an option one can pursue if they wish to and stay away from if they wish to.

- Much of the challenge that draw's people to trading is the fact that they are in essence playing against other people in the market, so trading profitably gives one a similar sense of accomplishment to playing a sport successfully.

- While many corporations have decided to treat their customers like competitors, trying to suck as much out of them as possible with little regard to their well being, over the long term I believe that this is a losing business model.

This is one of the reasons why I am especially excited about the internet, as the power that the information available online empowers the consumer, and is therefore speeding up the process of killing off the bad companies and promoting the good companies. Over the long term I truly believe that, even with things such as health care that are very messed up now, companies who pursue honest business practices that put the interests of the consumer first will end up the most profitable.

- With sites such as this one I believe the same holds, in that sites who honestly try to help people learn, provide information and bring people together in a way that is truly beneficial to the largest number of people, and put the interests of their users first, will in the long run be much more profitable than sites that try to suck people in and get as much out of them as possible before tossing them aside.

2. No I do not think that this is what neophyte traders need, and I have done my best to help structure this community in a way that this is not what we try to do. As Jack Schwagger wrote in Market Wizards, the one common trait that he found among all the traders he interviewed, was that they had developed a strategy that fit their own unique personality.

I think this is true even with the Informed System project as more than anything I see the value here in showing people some of the different steps we are going through to try and develop this system will be of benefit to traders as they work to develop there own.

If there are things that we can do to better the site in this regard I am all ears so fire away.

3. As Bill Gates points out in his speech to the World Economic Forum Below, while Adam Smith did point this out in Wealth of Nations, he also opened his first book (The Theory of Moral Sentiments), with the following statement:

"how selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it."



In addition to enjoying what I do which is very important to me, I also believe that the most benefit will come (whether that is defined as profit, self satisfaction or whatever) from doing business in an honest and ethical way. For me even if this were not the case, any pleasure that I would receive from the profits that would come from a business that did not do this, would be more than offset by guilt.

For a more detailed response as to why I do this and how I stand to benefit see http://www.informedtrades.com/26958-why-do-you-do.html[/url] ]this post, which is also included in my personal profile, for anyone who is interested in learning more about me.

Hope that helps. If there are any other thoughts on this one feel free to comment as always.

Best Regards,
Dave

__________________
Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.

Excellent points all of them, especially the one likening trading to sports. No one feels bad for the losing team enough to not play the game. It's just accepted as part of the game.

Loved the vid as well, at least the theory of what Gates is attempting to set in motion. However I remain skeptical as to the construct of the cloaked underbelly of large corporations. Let me give you a scenario and tell me what you think.

Corporation A has two basic goals in the forefront of its business plan. Listed by priority they are 1. To target a market and capitalize. 2. To maintain a positive public image ( as having this is in direct correlation to achieving goal 1).

After much analysis and calculation they come to that there are only two ways to do this given their current resources.

1. Employ an American workforce with an overhead of 500 million to generate 1b. This would ensure that their profit goals are met as well as their public image goals.

2. Outsource the work to a foreign country where men, women, and children would work 16 hour days in a sweat shop setting for only half the overhead generating 2.5b, 500m of which they use to somehow cover up the whole operation and end up with 2b. All of their goals are achieved and they now have managed to generate twice the profit.

Honestly, which one of those plans do you think will be executed in light of the many scandals and debacles seen in america's recent past?

"When a man's only tool is a hammer he treats everything like a nail."
Or more appropriately, When a man only cares about money he treats everything as though it can be bought.

One more question for everyone who is willing to read through this pretty elaborate dialogue.

You mentioned that the internet will help shut down bad operations. I would like to discuss a few different ways this could be possible. Do you mean simply word of mouth? Or are you thinking about more of a reverse credit type deal? Anyway, I myself am enjoying these conversations as I find them intellectually stimulating as well. Question for you Dave, not that you would have time to if you do, but do you play chess at all? Or any activity affording the opportunity to exercise logical thinking regularly. I only ask because it seems you have the ability to organize your thoughts very well.