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General question: if I had an algorithm that could perform well, why would I hand it over to Quantopian? Isn't a lot of the value derived from the secrecy?

artifaxx 10y ago
It depends if you have enough capital to trade on that algorithm at scale. The more capital you personally have the more potential value you get from keeping it secret.
jackmott 10y ago
There is rather a lot of cost in being able to hook your algorithm up to the markets with fast enough access.
supster 10y ago
From Quantopian website: "You own your algorithms. Your algorithms are kept secret. Ideas are some of the most valuable assets anyone has. We are committed to protecting your intellectual property and keeping it safe." More importantly, a lot goes into developing an algorithm including clean data, back testing, infrastructure. Quantopian handles all that for you, so you can focus on developing a stellar algorithm. Of course YMMV.
jihoon796 10y ago
Quantopian provides data, a community, and capital. All of these are expensive costs for any individual trader. In addition, a lot of strategies don't really work that well unless you have a 'critical mass' of capital with which to capture any meaningful profit. Execution is also important. It's one thing to have an algorithm that works in theory and is back-tested. Execution is a different ball-game because you have to deal with factors like trading costs/brokerage fees, accounting, etc.
emptybits 10y ago
You can use their data and (fast?) order fulfilment to test your algo to the point where you know it performs well, and then go off and do whatever wherever you want with it. You wouldn't "hand it over". From Quantopian's FAQ: [1] Q: Who owns my algorithms? A: You own your algorithms. Everything you write is yours. Quantopian does not own your algorithms; you do. Q: Are my algorithms secret? A: Your algorithms are kept secret. We are committed to protecting your intellectual property and keeping it safe. Ideas are some of the most valuable assets anyone has. We take this responsibility to our members extremely seriously Caveat: In their detailed terms: "If in the course of providing technical support or other maintenance of the Services it becomes necessary for Quantopian to view your private Content, such viewing will be restricted to the very specific technical purpose." [2] [1] https://www.quantopian.com/faq https://www.quantopian.com/faq [2] https://www.quantopian.com/policies#terms https://www.quantopian.com/policies#terms
- harry8 10y ago
  As long as you trust this guy Cohen, oh yeah, the article mentions he's been done for insider trading. Reputation is as important as assurances given.
arzt 10y ago
Great question. It's the quintessential platform tradeoff. You pay in the short term to utilize their free tools (backtesting, data sets etc). The potential opportunity cost could be pretty steep if you create the next Renaissance and they reap the majority of the gains from licensing your algo.
cowmoo 10y ago
> if I had an algorithm that could perform well, why would I hand it over to Quantopian? I'll share my algorithm here: https://www.quantopian.com/posts/xiv-slash-vxx-pair-trade-1 https://www.quantopian.com/posts/xiv-slash-vxx-pair-trade-1 "Pair-trading VXX and XIV based on the StockTwits sentiments of the SPY at market open. The backtest did really well from 2011 to 2014 with 1700-1800% return in 3 years; and flat between 2014 to present-time... would love to see what people come up to reduce the drawdown's and improve the performance from 2014-2016". The reason I share my algorithms is trading is one of the hardest ways to make easy money. Making money due to slippage, regime change and overfitting bias is difficult, a poor investment (most hedge funds don't beat index funds) but sharing and learning about statistics, machine-learning and big data is a better investment in self. Also philosophically, most strategies have limited shelf-life, so it is better to learn how to fish than to hold onto the fish you've got.
mikkom 10y ago
If they allocate 10 million for your algo and you get 10% of the profits but pay none of the losses... Well you can calculate the math. Plus they don't require exclusivity for the algos so you can start your own hedge fund and trade your algos if you want to. IMHO It's a pretty good deal.
superuser2 10y ago
Getting your algorithm a seat at the big boy table, and attracting enough capital to turn a high percentage return into a high dollar amount return, are serious tasks.
alexmingoia 10y ago
Check out https://numer.ai https://numer.ai - you only upload predictions not the model. There's no risk of exposing your model.

artifaxx 10y ago

It depends if you have enough capital to trade on that algorithm at scale. The more capital you personally have the more potential value you get from keeping it secret.

jackmott 10y ago

There is rather a lot of cost in being able to hook your algorithm up to the markets with fast enough access.

supster 10y ago

From Quantopian website: "You own your algorithms. Your algorithms are kept secret. Ideas are some of the most valuable assets anyone has. We are committed to protecting your intellectual property and keeping it safe." More importantly, a lot goes into developing an algorithm including clean data, back testing, infrastructure. Quantopian handles all that for you, so you can focus on developing a stellar algorithm. Of course YMMV.

jihoon796 10y ago

Quantopian provides data, a community, and capital. All of these are expensive costs for any individual trader. In addition, a lot of strategies don't really work that well unless you have a 'critical mass' of capital with which to capture any meaningful profit. Execution is also important. It's one thing to have an algorithm that works in theory and is back-tested. Execution is a different ball-game because you have to deal with factors like trading costs/brokerage fees, accounting, etc.

emptybits 10y ago

You can use their data and (fast?) order fulfilment to test your algo to the point where you know it performs well, and then go off and do whatever wherever you want with it. You wouldn't "hand it over". From Quantopian's FAQ: [1] Q: Who owns my algorithms? A: You own your algorithms. Everything you write is yours. Quantopian does not own your algorithms; you do. Q: Are my algorithms secret? A: Your algorithms are kept secret. We are committed to protecting your intellectual property and keeping it safe. Ideas are some of the most valuable assets anyone has. We take this responsibility to our members extremely seriously Caveat: In their detailed terms: "If in the course of providing technical support or other maintenance of the Services it becomes necessary for Quantopian to view your private Content, such viewing will be restricted to the very specific technical purpose." [2] [1] https://www.quantopian.com/faq https://www.quantopian.com/faq [2] https://www.quantopian.com/policies#terms https://www.quantopian.com/policies#terms

harry8 10y ago
As long as you trust this guy Cohen, oh yeah, the article mentions he's been done for insider trading. Reputation is as important as assurances given.

arzt 10y ago

Great question. It's the quintessential platform tradeoff. You pay in the short term to utilize their free tools (backtesting, data sets etc). The potential opportunity cost could be pretty steep if you create the next Renaissance and they reap the majority of the gains from licensing your algo.

cowmoo 10y ago

> if I had an algorithm that could perform well, why would I hand it over to Quantopian? I'll share my algorithm here: https://www.quantopian.com/posts/xiv-slash-vxx-pair-trade-1 https://www.quantopian.com/posts/xiv-slash-vxx-pair-trade-1 "Pair-trading VXX and XIV based on the StockTwits sentiments of the SPY at market open. The backtest did really well from 2011 to 2014 with 1700-1800% return in 3 years; and flat between 2014 to present-time... would love to see what people come up to reduce the drawdown's and improve the performance from 2014-2016". The reason I share my algorithms is trading is one of the hardest ways to make easy money. Making money due to slippage, regime change and overfitting bias is difficult, a poor investment (most hedge funds don't beat index funds) but sharing and learning about statistics, machine-learning and big data is a better investment in self. Also philosophically, most strategies have limited shelf-life, so it is better to learn how to fish than to hold onto the fish you've got.

mikkom 10y ago

If they allocate 10 million for your algo and you get 10% of the profits but pay none of the losses... Well you can calculate the math. Plus they don't require exclusivity for the algos so you can start your own hedge fund and trade your algos if you want to. IMHO It's a pretty good deal.

superuser2 10y ago

Getting your algorithm a seat at the big boy table, and attracting enough capital to turn a high percentage return into a high dollar amount return, are serious tasks.

alexmingoia 10y ago

Check out https://numer.ai https://numer.ai - you only upload predictions not the model. There's no risk of exposing your model.