People frequently discover indicators on forums, trading groups, etc. Although most are bad, occasionally an indicator looks very promising for generating automated trades. Are you allowed to use the file in an Expert Advisor?
The crux of the matter is what you intend to do with it. Intellectual property (IP) law has a concept called public domain. If you create an indicator and then share it on a public web site, then the file is presumably free for all to use. Essentially, you give away the copyright when you share it for all to see. The only caveat would be if the file or hosting page places explicit restriction on how the file may or may not be used.
Personal use of an Expert Advisor does not pose a problem. This includes indicators that you purchased. The only legal reason that prevents you from using a commercial indicator in a personal EA is if the purchasing agreement for the indicator forbids creating derivative products, such as using the indicator to build a new EA.
Writing a commercial EA with a public domain custom indicator also meets the hurdle. You cannot take someone else’s work and pass it off as your own; you must substantially alter or improve it before the work becomes yours. Turning an indicator into an automated strategy qualifies as a substantial improvement.
The thorniest issue pops up when you want to use a commercial indicator to create a commercial EA without the permission of the indicator’s owner. Most people, myself included, would call this theft. The only way that you can do this legally and ethically is to secure an agreement from the indicator’s copyright owner.
I am a programmer. If you’re deeply concerned about this issue and want to ensure this information truly reflects US law, then I strongly suggest that you speak with an intellectual property attorney.
Here’s a quick summary:
Create a private EA from a public domain custom indicator – Almost always ok, unless the indicator owner forbids it
- Create a private EA from a commercial custom indicator – generally OK, unless your purchasing agreement forbids it
- Create a commercial EA from a public domain custom indicator – generally OK, unless the indicator’s creator forbids it
- Create a commercial EA from a commercial indicator – never OK, unless you strike an agreement with the copyright owner