Phamaceutical and biotech companies can patent molecules and seeds… is it possible for Traders to patent their trading strategies? I’m guessing the answer is NO but I don’t know what prevents a trading strategy from being patented.
Well what societal benefit exists from patenting a trading strategy?
When you patent things like drugs, you’re incentivized to develop them…same thing with technology, you patent technology, you’re incentivized to create it, which benefits society as a whole.
Trading you’re just moving money around…
I believe you cannot patent an idea; only the implementation of an idea. So if you have a particular moving strategy or indicator, you can patent the code, but you cannot patent the idea of using the strategy or indicator. These things tend to be protected more through non disclosure agreements which have a looser standard of proof. The problem is that due diligence typically requires disclosing stuff to people who are less actionable if they incorporate the idea in a mosaic-like stew of other ideas.
The real,challenge is that eventually strategy ideas will leak out over time, so you need to be able to generate new ones continuously. But the new ideas are harder to find and many are forced into making more and more unrealistic assumptions in the search for them.
if you patent a strategy that means you have to disclose in full how it works etc…that defeats the purpose no?
WD-40 never patented their formula so people couldn’t make knock-off versions. They just keep it secret. If you get a good trading strategy, I’d follow their example.
Michaud’s resampling technique has a patent. If you do develop a trading strategy, start a firm, and hire some people and are worried they will steal or sell it, just make them sign away their children (metaphorically) if they compromise trade secrets.
Computer algorithms can be patented, can’t they? How is that different from a trading strategy?
Planet Money on NPR most recent podcast had to do with Patents and what qualifies – due to the Apple vs Samsung case. May want to check it out
But trade secret would probably be more useful than patent. For the simple reason once you patented that strategy, knock offs would occur likely removing the benefit of that strategy. Computers already account for a lot of the trades executed on a daily basis, you’d just give the operators a new idea.
you can patent a process…