I am starting this thread to have a logical discussion about an idea that is prevalent in our FX world, the idea that if somebody invents/discovers something truly useful they would never sell it. Opinions are welcome, but please try to provide a logical substantiation for whatever you say.
Lets explore the idea a bit further. I believe that the conventional thinking believes that if a person were merely in possession of a winning technique that they would be able to immediately convert that knowledge into cash winnings, sufficient such so that they could easily support themselves from those winnings and accrue further still unto their ever-increasing account. I also believe that the conventional thinking believes that by sharing the technique with others, that the 'edge' of the technique would be 'diluted' such that it would 'ruin' the technique, even though such technique once had been a winner. Ok so conventional wisdom believes:
1) There is no point to sell it because you can make all the money you want with it right now in the markets
2) Selling it ruins the system, so if the system were legit in the first place the developer would not be selling it
Can we agree on this? If I missed something or you have a contrary take on this, lets hear it.
Proceeding on, assuming agreement on the above (we can discuss further if there is need), let me offer a few observations about these beliefs.
First, I don't think that Idea #1 really makes as much sense as people assume. Trading is a skill and System Design is a skill. They are not the same skill! There are people who are excellent traders who use really primitive stuff because they can't design anything worthwhile. There are nerds like me who can occasionally do semi-amazing things with our inventions, but who haven't really mastered the art of trading yet. It is especially possible that a truly talented system designer can't trade any better than average because trading is a totally different kind of skill from analysis. The kind of person who would naturally excel at analytic tasks and creativity within a technical realm is not really the kind of person who naturally has what it takes to trade with the discipline and instinct needed.
Next, people forget that some poor people are smart. You can be flat broke and still develop winning technology. Maybe you have only a few hundred to open a trading account. Even with a killer system, it could take years before that account gets big enough to live off the earnings. What is the most logical thing to do in the mean time? Just sit on this valuable technology and wait? Why not sell it for a while and build up your trading account, and THEN live off your trading alone?
Dilution. That idea makes sense at first, but not really if you think about it. Do you really believe that 100 or 1000 or even 10000 Retail Traders all doing the same thing at the same time would really have such a big effect on the market? I can see that easily in Pork Bellies or Lumber, but FX? Really? There is more money traded each day in the FX markets than in all the other markets of all other kinds combined. I think the assumption that a massed herd of Retail Traders can move the market is probably a lot less true than expected. But even if that is really true, lets think about this a bit further.
I would love it if I sold a system to a bazillion people and my 'herd' started moving the markets. As a system designer, that would not 'dilute' anything for me. I can always adjust my system to give ME the signals 1 minute ahead of you. Any decent system designer could do this to their system. Also, if my signals started moving the markets, a whole bunch of my 'herd' would be making serious bank too. The jolt caused by the herd would likely cause further reactions in the markets that would often trigger moves resulting in good profit for all the herd members. So even if this assumption that a herd of system followers would impact the markets is true, I don't see how this would occur in the negative way that people usually expect. If the system designer does his job and generates signals that occur at real market inflection points, the whole herd would make money when their impact causes other market participants to join in and extend the wave to a useful amplitude.
So I would like to hear other opinions about this.
Lets explore the idea a bit further. I believe that the conventional thinking believes that if a person were merely in possession of a winning technique that they would be able to immediately convert that knowledge into cash winnings, sufficient such so that they could easily support themselves from those winnings and accrue further still unto their ever-increasing account. I also believe that the conventional thinking believes that by sharing the technique with others, that the 'edge' of the technique would be 'diluted' such that it would 'ruin' the technique, even though such technique once had been a winner. Ok so conventional wisdom believes:
1) There is no point to sell it because you can make all the money you want with it right now in the markets
2) Selling it ruins the system, so if the system were legit in the first place the developer would not be selling it
Can we agree on this? If I missed something or you have a contrary take on this, lets hear it.
Proceeding on, assuming agreement on the above (we can discuss further if there is need), let me offer a few observations about these beliefs.
First, I don't think that Idea #1 really makes as much sense as people assume. Trading is a skill and System Design is a skill. They are not the same skill! There are people who are excellent traders who use really primitive stuff because they can't design anything worthwhile. There are nerds like me who can occasionally do semi-amazing things with our inventions, but who haven't really mastered the art of trading yet. It is especially possible that a truly talented system designer can't trade any better than average because trading is a totally different kind of skill from analysis. The kind of person who would naturally excel at analytic tasks and creativity within a technical realm is not really the kind of person who naturally has what it takes to trade with the discipline and instinct needed.
Next, people forget that some poor people are smart. You can be flat broke and still develop winning technology. Maybe you have only a few hundred to open a trading account. Even with a killer system, it could take years before that account gets big enough to live off the earnings. What is the most logical thing to do in the mean time? Just sit on this valuable technology and wait? Why not sell it for a while and build up your trading account, and THEN live off your trading alone?
Dilution. That idea makes sense at first, but not really if you think about it. Do you really believe that 100 or 1000 or even 10000 Retail Traders all doing the same thing at the same time would really have such a big effect on the market? I can see that easily in Pork Bellies or Lumber, but FX? Really? There is more money traded each day in the FX markets than in all the other markets of all other kinds combined. I think the assumption that a massed herd of Retail Traders can move the market is probably a lot less true than expected. But even if that is really true, lets think about this a bit further.
I would love it if I sold a system to a bazillion people and my 'herd' started moving the markets. As a system designer, that would not 'dilute' anything for me. I can always adjust my system to give ME the signals 1 minute ahead of you. Any decent system designer could do this to their system. Also, if my signals started moving the markets, a whole bunch of my 'herd' would be making serious bank too. The jolt caused by the herd would likely cause further reactions in the markets that would often trigger moves resulting in good profit for all the herd members. So even if this assumption that a herd of system followers would impact the markets is true, I don't see how this would occur in the negative way that people usually expect. If the system designer does his job and generates signals that occur at real market inflection points, the whole herd would make money when their impact causes other market participants to join in and extend the wave to a useful amplitude.
So I would like to hear other opinions about this.