4 ms·

IAMA thread looks very interesting, thanks (although you never know when it's someone pretending to be something he's not). I'm a bit skeptical of algodeal. If

IAMA thread looks very interesting, thanks (although you never know when it's someone pretending to be something he's not). I'm a bit skeptical of algodeal. If they are seriously doing this (actually licensing strategies and following them), wouldn't they be setting themselves up to get ripped off? It seems that if you know what strategy someone is going to use, you can use it against them (effectively changing the market between historical tests and a live run).

arthurdent 17y ago
I actually think AlgoDeal sounds great, but can understand your skepticism. I haven't really looked into it, but what it sounds like to me is they provide you a platform to build strategies and test them, play with fake money. They may optionally take your strategy and run it in the market. If it is successful, they split returns with you. When you say they're setting themselves up to get ripped off, I think you're suggesting that Evil Person X may come up with a strategy A that does well enough in backtests, but is paired with a strategy B designed to rip off that strategy A. Then after AlgoDeal applies strategy A, I put my secret millions to work and make better returns for myself. They don't HAVE to run your strategy. I'm assuming they're smart guys and have some selection criteria other than "performed well in backtests", so they'd try to choose strategies that were less likely to get ripped off by the evil person's counter-strategy. Also, I think of this as being the VC who seems massive dealflow. Half of it is the fun of seeing all the good ideas and picking the top ones. Some will still fail, but choosing from a much larger base of ideas is great. Plus they utilize their own expertise to tweak strategies for themselves. Its basically YC for algo strategies, except they don't have to pay you, they can steal your startup and change it a bit, and they take a much bigger percentage (i'd guess 50-80%, based on what I think are something like industry standards). Its quite common place in finance to have people give you strategies and give them a cut of the profits. This takes it to the next level: crowdsources strategies and removes the barrier to entry for a lot of smart people (trading costs) in exchange for the right to tap those ideas. Love it.
arthurdent 17y ago
Regarding the IAMA thread: Small data point, but I've actually chatted with him a few times, and he seems legit. Can't verify his earnings or size he trades, but he seems to know his stuff.

arthurdent 17y ago

I actually think AlgoDeal sounds great, but can understand your skepticism. I haven't really looked into it, but what it sounds like to me is they provide you a platform to build strategies and test them, play with fake money. They may optionally take your strategy and run it in the market. If it is successful, they split returns with you. When you say they're setting themselves up to get ripped off, I think you're suggesting that Evil Person X may come up with a strategy A that does well enough in backtests, but is paired with a strategy B designed to rip off that strategy A. Then after AlgoDeal applies strategy A, I put my secret millions to work and make better returns for myself. They don't HAVE to run your strategy. I'm assuming they're smart guys and have some selection criteria other than "performed well in backtests", so they'd try to choose strategies that were less likely to get ripped off by the evil person's counter-strategy. Also, I think of this as being the VC who seems massive dealflow. Half of it is the fun of seeing all the good ideas and picking the top ones. Some will still fail, but choosing from a much larger base of ideas is great. Plus they utilize their own expertise to tweak strategies for themselves. Its basically YC for algo strategies, except they don't have to pay you, they can steal your startup and change it a bit, and they take a much bigger percentage (i'd guess 50-80%, based on what I think are something like industry standards). Its quite common place in finance to have people give you strategies and give them a cut of the profits. This takes it to the next level: crowdsources strategies and removes the barrier to entry for a lot of smart people (trading costs) in exchange for the right to tap those ideas. Love it.

arthurdent 17y ago

Regarding the IAMA thread: Small data point, but I've actually chatted with him a few times, and he seems legit. Can't verify his earnings or size he trades, but he seems to know his stuff.