So far, I have concentrated almost entirely on user-facing investment platforms. But what if you have some coding skills and some inkling of a market strategy? Then, you may be ready for Quantopian. Quantopian is the World's First Open Source Hedge Fund. In other words, you are allowed to program your own trading algorithms and, shocker, keep the profits. There are really only two requirements: you must be willing to learn Python and you need to have a lot of patience.
Quantopian opens up several new avenues in investing. Historically, the most expensive part of algorithmic trading has been the data for backtesting. Having good minute-to-minute data is expensive and this is how algo firms like Renaissance have kept an edge over everyone else. Well, that and hiring the best talent money can buy. Somewhat mysteriously, Quantopian has obtained fantastic minute-to-minute data back to 2002. They offer this, for free, to the Quantopian community as well as a nice Python platform and a link to Interactive Brokers.
The Quantopian Community is, in fact, the best part of Quantopian. It is full of experts in programming, business, algo-trading, computer science, math, statistics and similar subjects. You can learn from their posts, their weird attempts at high-powered algorithms (6000% returns with 36,000 times leverage anyone?), and especially their interesting research articles that they based their strategies on. A relative beginner, such as myself, can learn a lot just by following along.
Furthermore, you can "clone" an algorithm from someone else, tweak it a bit, and enter it in a Quantopian contest to manage $100,000 of their money. All profits, if any, go to you if you win the contest. Supposedly, this helps Quantopian find managers for million dollar portfolios, but this is a plan for the future. While knowledge of Python helps, you can go in with only some basic common sense and a willingness to learn and find yourself an algorithmic trader.
There are, however, some downsides to Quantopian. The first is whether you believe algorithmic trading is the "disruptive" force some claim it is. High frequency trading (the practice of slicing a few cents off of each trade based on an algorithmic model predicting market swings) is almost entirely unprofitable for the small time investor, requiring super computers and fiber optic cables beyond the budget of the average small country. Low frequency trading, on the other hand, is only as good as the system it executes. Either way, this requires technical knowledge of the markets and of algorithms. If you don't have both, you might as well kiss your money goodbye.
The second downside is the fact that no one currently knows the Quantopian business model. Quantopian is not a broker and does not charge commissions. It has plenty of venture capital funding, but no known way to capitalize on the broad open source base of its community. The algorithms legally belong to the user, as per Quantopian's own contracts. How, precisely, will this open source hedge fund make money? Or is it simply a platform project drawing like minds together? The jury remains out on this one, as well as algorithmic trading. I'm not entirely sure this one is video game investing, per se. It is more like developer investing, but that's part of the fun, isn't it?
Quantopian opens up several new avenues in investing. Historically, the most expensive part of algorithmic trading has been the data for backtesting. Having good minute-to-minute data is expensive and this is how algo firms like Renaissance have kept an edge over everyone else. Well, that and hiring the best talent money can buy. Somewhat mysteriously, Quantopian has obtained fantastic minute-to-minute data back to 2002. They offer this, for free, to the Quantopian community as well as a nice Python platform and a link to Interactive Brokers.
The Quantopian Community is, in fact, the best part of Quantopian. It is full of experts in programming, business, algo-trading, computer science, math, statistics and similar subjects. You can learn from their posts, their weird attempts at high-powered algorithms (6000% returns with 36,000 times leverage anyone?), and especially their interesting research articles that they based their strategies on. A relative beginner, such as myself, can learn a lot just by following along.
Furthermore, you can "clone" an algorithm from someone else, tweak it a bit, and enter it in a Quantopian contest to manage $100,000 of their money. All profits, if any, go to you if you win the contest. Supposedly, this helps Quantopian find managers for million dollar portfolios, but this is a plan for the future. While knowledge of Python helps, you can go in with only some basic common sense and a willingness to learn and find yourself an algorithmic trader.
There are, however, some downsides to Quantopian. The first is whether you believe algorithmic trading is the "disruptive" force some claim it is. High frequency trading (the practice of slicing a few cents off of each trade based on an algorithmic model predicting market swings) is almost entirely unprofitable for the small time investor, requiring super computers and fiber optic cables beyond the budget of the average small country. Low frequency trading, on the other hand, is only as good as the system it executes. Either way, this requires technical knowledge of the markets and of algorithms. If you don't have both, you might as well kiss your money goodbye.
The second downside is the fact that no one currently knows the Quantopian business model. Quantopian is not a broker and does not charge commissions. It has plenty of venture capital funding, but no known way to capitalize on the broad open source base of its community. The algorithms legally belong to the user, as per Quantopian's own contracts. How, precisely, will this open source hedge fund make money? Or is it simply a platform project drawing like minds together? The jury remains out on this one, as well as algorithmic trading. I'm not entirely sure this one is video game investing, per se. It is more like developer investing, but that's part of the fun, isn't it?
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