Intellectual Property Protection/Confidentiality

[prudential]

Hi there,

I'm surprised there's no existing threads on this topic. Its something that really concerns me as a trader.

1. What have others done to protect their trading systems when contracting a developer to create their Ninja Scripts?

2. Should you only contract someone locally so you can get them to sign off on legally-binding non-disclosure agreement and they can work on the development in-house?

You're essentially handing over a multi-million dollar idea to someone for free which they could use without you knowing. There's no way to monitor it. Not only that, they end up charging you for sharing your idea with them. Your idea could then be handed over to some corporation and your edge would disappear before you know it. There's no way of knowing and being able to pursue it legally.

What's the normal procedure for dealing with this very obvious dilemma?

3. Are scripts visible to Nina Trader? Can Ninja Trader see what scripts you are running through their platform?

[NinjaTraderEcosystem_Wesley]

Hello prudential,

Thanks for posting! This is Wesley from the NinjaTrader Ecosystem. It is important to do your own due diligence in researching companies to work with for any strategy or indicator coding needs. Most if not all of the NinjaTrader Consultants listed on the NinjaTrader Ecosystem website will sign non-disclosure agreements, either physically or electronically to ensure your trading system logic is safe. This is the most common practice in the industry for commissioning programming work.

NinjaScript files are hosted locally and not transferred through the NinjaTrader platform, so your work is safe from the eyes of even NinjaTrader staff. Members of the NinjaTrader Ecosystem are able to utilize licensing tools within the platform to create, modify and expire client licenses for protected code. If you'd like more information about becoming a NinjaTrader Ecosystem Add-on Provider, please email info[at]ninjatraderecosystem[dot]com.

[koganam]

Hi there,

I'm surprised there's no existing threads on this topic. Its something that really concerns me as a trader.

1. What have others done to protect their trading systems when contracting a developer to create their Ninja Scripts?

2. Should you only contract someone locally so you can get them to sign off on legally-binding non-disclosure agreement and they can work on the development in-house?

You're essentially handing over a multi-million dollar idea to someone for free which they could use without you knowing. There's no way to monitor it. Not only that, they end up charging you for sharing your idea with them. Your idea could then be handed over to some corporation and your edge would disappear before you know it. There's no way of knowing and being able to pursue it legally.

What's the normal procedure for dealing with this very obvious dilemma?

3. Are scripts visible to Nina Trader? Can Ninja Trader see what scripts you are running through their platform?

We use non-Disclosure Agreements, and we obey them. We obey them for a simple reason: trust. When one breaks a NDA, business usually dries up.

Given how many systems we have developed both from our own ideas and on contract, we can be reasonably certain that no retail system is worth destroying our business. Let me explain. Retail traders are generally subject to commissions large enough that they have to make systems that trade for reasonably significant returns per trade. That means generally that the systems, even when robust, are simply active in trades too long to have large profitability with reasonable win/loss ratio. As an example, in our experience, we actually developed a system for a client who KNEW that he would have a low win/loss ratio, and was willing to exchange that bad ratio for a very large profit/loss ratio. As it is, optimized over a fuzzy range (which as it was profitable over a wide range of values, was a robust system), the win/loss ratio was between 26% and 34%, and the profit/loss ratio was almost 4.5!

Larger traders who have reasonable commissions can afford to jump in for 2 to 3 ticks and get out. Such systems have good profitability, with typically very high win/loss ratio. However, usually such customers also have large budgets and an army of Ph.D's in their quant office, so are not talking to us anyway.

All that long-winded stuff is just to say that retail traders' systems, even when profitable, are just not worth stealing, because the downside of losing a business is just not worth it. Retail traders' systems are just not profitable enough to tempt or induce theft.

If you want someone to code for you, you are going to have to disclose what you want coded. The only real protection is a NDA. We always sign one when requested. Typically, if what the customer thinks is a secret is something that we have already coded in something that we sell, we will even show the customer that the idea is already implemented, and so we cannot agree not to use what we have already been using. Other than that, we will pretty much sign anything reasonable.