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Trading is Intellectual Property: the proof is Coke!

10 February 2014

Ever wondered what the common ingredient to trades, trading algorithms and Coke is?

Easy! Intellectual Property!

Agree that speculation is an IP industry? To understand the full implications for your trading income, look no further than Coca Cola: a lesson on capturing – or missing out on – the dividends accruing to intellectual property.

The origins of Coca-Cola (hat tip wikipedia)

Colonel John Pemberton was wounded in the American Civil War, became addicted to morphine, and began a quest to find a substitute to the dangerous opiate. The prototype Coca-Cola recipe was formulated at Pemberton’s Eagle Drug and Chemical House in Columbus, Georgia, originally labelled coca wine.

Insight 1: True intellectual property, like a successful trading strategy, is the valuable product of hard, sustained effort.

He may have been inspired by the formidable success of Vin Mariani, a European coca wine. In 1885, Pemberton registered his French Wine Coca nerve tonic (…) essentially a non-alcoholic version of French Wine Coca.

Insight 2: Your strategy’s IP could inspire others roaming the markets!

The first sales were at Jacob’s Pharmacy in Atlanta, Georgia, on May 8, 1886. It was initially sold as a patent medicine for five cents a glass at soda fountains.

Insight 3: IP has a value – no-one who has worked hard to develop a successful trading strategy gives it away for free!

With that in mind, look closer at the Coke ticket (a beauty, BTW)

First Coca Cola Ticket

Notice the Trademark Logo – IP Protection. This way you had no way to use the logo (IP!) without 1) advertising Coke and 2) incurring in legal risk.

Insight 4: Successful creators protect the IP they disclose!

Insight 5: Successful market the product of IP but do NOT, repeat DO NOT, disclose their IP!

The business model of IP is to disclose, for a price,  the product of the IP, not the IP itself! Coke buyers paid for a glass of patent medicine: they enjoyed the product of the IP (they drank it!), but NEVER, EVER got anywhere close to the formula (patent!). Pemberton (literally!) locked the formula in a vault to make sure that there was one and only one way to drink Coca Cola: to pay Pemberton for it, every time. 

Wonder what happens if you don’t do that? Look no further than… Coke!

Pemberton was diligent in withholding IP from customers… alas not from partners. By 1888, three versions of Coca-Cola were sold by three separate ¨partners¨ who laid hands on the formula.

Insight 5: IP, just like your trading strategy, benefits ANYONE deploying it. When disclosing your IP, you’re waiving (some or all of) the future profits it generates!

Result? The Pemberton family, like the inventor of Vin Mariani before them, lost Coca Cola to those who got access to the formula, and made the most of it.

Insight 6: IP benefits copiers as much (if not more) than inventors: IP leakage hurt Pemberton, but it hurt the inventor of Vin Mariani so much, that we even ignore his name!

Trading lessons?

If you didn’t already, now you know. Your trades ARE the product of your intellectual property.

If you absolutely must, tweet your trades, sell your algorithm or explain your strategy and charting set-ups in your blog. But beware:

  • If you disclose it all in one go, you could end up the unknown (= forgotten!) French guy who invented Vin Mariani (the Coca Cola),
  • If you disclose it trade by trade, remember that valuable IP WILL BE reverse-engineered. Trades are NOT the IP itself, they’re the key to the vault. Incidentally, this is the reason why Darwinex will NEVER publish the track-record of our members. We sure certify that it is true, but that’s no excuse to compromising your IP!
  • If you’re pitching to manage investor capital, DON’T disclose so much IP in your pitch that others can then replicate your strategy!

At all times, remember Pemberton:

  • By all means, rent the IP: allow investors to benefit from your IP via fees… but
  • NEVER give so much of your formula away that investors can replicate it without paying you going forward!
  • Before tweeting, realize that markets learn 24/7. Once you disclose IP you will (at best) share the success of your intellectual property.

PS: if the content of this post sounds too trivial to you… feel free to recommend it to good traders roaming forums, engaging in mirror-trading / copy trading / social trading sites. Looks like they missed it: trading is Intellectual Property!

 

Last News

Darwinex Amended trading Hours for President’s Day (19 February 2018)

13 February 2018

Please note the amended Darwinex trading hours for the upcoming President’s Day in the US on 19 February 2018 (all times are in UK – GMT time).  Instrument Trading Hours  FX 22:05 Sun – 22:00 Mon   DARWINS 22:05 Sun – 22:00 Mon  COMMODITIES   Gold* 23:01 Sun –17:59 Mon Silver* 23:00 Sun –18:00 Mon Platinum* 23:00 Sun –18:00 Mon Palladium* 23:00 Sun –18:00 Mon US Crude […]

Please note the amended Darwinex trading hours for the upcoming President’s Day in the US on 19 February 2018 (all times are in UK – GMT time).

 Instrument Trading Hours
 FX 22:05 Sun – 22:00 Mon
  DARWINS 22:05 Sun – 22:00 Mon
 COMMODITIES  
Gold* 23:01 Sun –17:59 Mon
Silver* 23:00 Sun –18:00 Mon
Platinum* 23:00 Sun –18:00 Mon
Palladium* 23:00 Sun –18:00 Mon
US Crude 23:00 Sun –22:00 Mon
Natural Gas 23:00 Sun –22:00 Mon
 INDICES  
Australia 200 23:00 Sun –22:00 Mon
 Europe 50 23:00 Sun –22:00 Mon
France 40 23:00 Sun –22:00 Mon
Germany 30 07:00 – 21:00
Spain 35 07:00 – 19:00
Japan 225 23:00 Sun –22:00 Mon
 UK 100 23:00 Sun –22:00 Mon
 US SPX 500 23:00 Sun –22:00 Mon
 US Tech 100 23:00 Sun –22:00 Mon
Wall Street 30 23:00 Sun –22:00 Mon
*Amended Darwinex trading hours.

As always, at info@darwinex.com we’ll be happy to assist you!

Our Latest Improvement In…The Importance Of A Good First Impression

In Darwinex, a first impression is the event when one investor first encounters a DARWIN and forms an opinion about it. First impressions are based on a wide range of characteristics: D-Score, Investing Attributes, AuM, return, drawdown, trader’s equity, etc. But, what about the strategy description? Write a delightful description to connect with your investors […]

In Darwinex, a first impression is the event when one investor first encounters a DARWIN and forms an opinion about it. First impressions are based on a wide range of characteristics: D-Score, Investing Attributes, AuM, return, drawdown, trader’s equity, etc. But, what about the strategy description?

Write a delightful description to connect with your investors at a deeper level

We know that a good description could significantly influence whether an investor allocates capital in your DARWIN or not since, at the end of the day, the relationship between a DARWIN provider and its investors is based on trust.

We are also aware that some of you have a blog or website where investors, or other traders, can know more about you and your strategy.

Enhanced tool to describe your strategy

That is the reason why we have decided to enhance our description tool so you can incorporate bold, italics and a link to your site in the description of your DARWIN/strategy, in your main profile and in all your “Darwinian filters”.

Here a brief example of how to do it:

Bold => **bold** => bold

Italics => _italics_ => italics

Link to your website => Go to [my website](https://www.darwinex.com/) => Go to my website

DARWIN VTJ paused for new investment

7 February 2018

Due to the divergence caused by the sheer increase in the volume of investors in the DARWIN VTJ- more than € 2MM under management! -, its DARWIN provider has requested us to close it temporarily. This means that the DARWIN will remain closed for new investments and current investors in VTJ will only be able […]

Due to the divergence caused by the sheer increase in the volume of investors in the DARWIN VTJ- more than € 2MM under management! -, its DARWIN provider has requested us to close it temporarily.

This means that the DARWIN will remain closed for new investments and current investors in VTJ will only be able to sell it.

For your information, we are currently working on a “Capacity Management” tool which will allow DARWIN providers to pause their DARWIN if they meet the following criteria:

  • 1-The max AuM cap established by the DARWIN provider is surpassed. The minimum will be determined by Darwinex.
  • 2-The divergence % in the DARWIN goes beyond the threshold established by the DARWIN provider. At this point, the DARWIN will be automatically paused. Irrespective of the min divergence % required by the DARWIN provider, Darwinex will automatically pause the DARWIN if it goes beyong  1%-1.5% (we’re still defining the optimal %)

This tool will allow Investors to:

  • 1-Know the parameters chosen by the DARWIN provider in advance.
  • 2-Activate a notification mechanism that will alert them when a trader changes any of the parameters defined beforehand or the DARWIN is paused/reopened again.

In the absence of such tool, the procedure hereinafter will be similar to the one applied for VTJ: the DARWIN provider notifies Darwinex of its intention to pause its DARWIN and we will comply with its will, with the limitations above-mentioned.

IMPORTANT: from now on, in case a DARWIN provider decides to pause it before the launch of the “Capacity Manegement” tool , Darwinex will not send any kind of notification to its clients.

Should you want to share your views on this topic, you are more than welcome to participate in this Community thread.

And the DarwinIA winners are… (January 2018)

1 February 2018

The January 2018 edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period. Place DARWIN Notional allocation 1st VQB € 300,000.00 2nd RDD € 250,000.00 3rd GTD € 210,000.00 4th WFJ € 170,000.00 5th CBY € 150,000.00 […]

The January 2018 edition of our DarwinIA trading challenge came to its end. Below you can find the 48 winners of our € 4,000,000 notional allocation for a 6 month period.

Place DARWIN Notional allocation
1st VQB € 300,000.00
2nd RDD € 250,000.00
3rd GTD € 210,000.00
4th WFJ € 170,000.00
5th CBY € 150,000.00
6th KVL € 140,000.00
7th ONE € 130,000.00
8th HTX € 120,000.00
9th UYZ € 110,000.00
10th XYF € 110,000.00
11th VTS € 110,000.00
12th ZGE € 100,000.00
13th LDZ € 100,000.00
14th RZX € 100,000.00
15th XIS € 90,000.00
16th ERQ € 90,000.00
17th ZZI € 90,000.00
18th LOM € 80,000.00
19th MER € 80,000.00
20th QDJ € 80,000.00
21st FTA € 70,000.00
22nd PFH € 70,000.00
23rd PMZ € 70,000.00
24th STP € 70,000.00
25th ENI € 60,000.00
26th NTI € 60,000.00
27th LFS € 60,000.00
28th LLZ € 60,000.00
29th ADZ € 60,000.00
30th GED € 60,000.00
31st FEG € 50,000.00
32nd YZF € 50,000.00
33rd ZTY € 50,000.00
34th ILM € 50,000.00
35th XSN € 50,000.00
36th QNR € 50,000.00
37th SPV € 50,000.00
38th STT € 40,000.00
39th NDQ € 40,000.00
40th WWB € 40,000.00
41st UEI € 40,000.00
42nd JBR € 40,000.00
43rd ZOX € 40,000.00
44th CEM € 40,000.00
45th HGD € 30,000.00
46th LZL € 30,000.00
47th DZL € 30,000.00
48th VBU € 30,000.00

 

Have questions about DarwinIA trading challenge ? At info@darwinex.com we’ll be happy to assist you!

Darwinex Amended trading Hours for Australia Day (26 January 2018)

22 January 2018

Please note the amended Darwinex trading hours for the upcoming Australia Day on 26 January 2018 (all times are in UK – GMT time).  Instrument Trading Hours  FX 22:01 Thu –21:55 Fri   DARWINS 22:01 Thu –21:55 Fri  COMMODITIES   Gold 23:01 Thu –21:55 Fri Silver 23:00 Thu –21:55 Fri Platinum 23:00 Thu –21:55 Fri Palladium 23:00 Thu –21:55 Fri US Crude 23:00 Thu –21:55 Fri Natural Gas 23:00 Thu –21:55 Fri  INDICES […]

Please note the amended Darwinex trading hours for the upcoming Australia Day on 26 January 2018 (all times are in UK – GMT time).

 Instrument Trading Hours
 FX 22:01 Thu –21:55 Fri
  DARWINS 22:01 Thu –21:55 Fri
 COMMODITIES  
Gold 23:01 Thu –21:55 Fri
Silver 23:00 Thu –21:55 Fri
Platinum 23:00 Thu –21:55 Fri
Palladium 23:00 Thu –21:55 Fri
US Crude 23:00 Thu –21:55 Fri
Natural Gas 23:00 Thu –21:55 Fri
 INDICES  
Australia 200* *06:10  – 21:55 
 Europe 50 23:00 Thu – 21:55 Fri
France 40 23:00 Thu – 21:55 Fri
Germany 30 07:00 – 21:00
Spain 35 07:00 – 19:00
Japan 225 23:00 Thu21:55 Fri
 UK 100 23:00 Thu21:55 Fri
 US SPX 500 23:00 Thu21:55 Fri
 US Tech 100 23:00 Thu21:55 Fri
Wall Street 30 23:00 Thu21:55 Fri
*Amended Darwinex trading hours.

As always, at info@darwinex.com we’ll be happy to assist you!

Our Latest Improvement In … Chart Re-alignment!

19 January 2018

You already know that our incentives are 100% aligned with those of our clients –zero conflict of interest between Broker, Traders and Investors-, and this is something we feel VERY proud of in Darwinex. However, this was true to some extent as some of our tools had risen up in rebellion. In particular, the profile […]

You already know that our incentives are 100% aligned with those of our clients –zero conflict of interest between Broker, Traders and Investors-, and this is something we feel VERY proud of in Darwinex.

However, this was true to some extent as some of our tools had risen up in rebellion.

In particular, the profile of the DARWINs, displayed in the following sections, were slightly misaligned:

  1. Explore
  2. All DARWINs
  3. Any predefined filter
  4. Your Favorites
  5. Public User Profile
  6. A custom filter

Fortunately, the rebellion has not lasted long and we have been able to re-establish order…and alignment everywhere.

Trade safe!