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It is a great article, but why on earth someone will use a service like Quantopian or similar service? They are your competitor and who will prevent a disgrunt

by SirLJ 9y ago

It is a great article, but why on earth someone will use a service like Quantopian or similar service? They are your competitor and who will prevent a disgruntle employee or a hacker to steel your successful trading strategy? Just buy some data from eBay, you can get 20 years of historical stock market data for less than $100 and you can test any trading strategy or idea imaginable, including trend following, buy and hold ETFs, etc... The barrier of entry is pretty low and you can develop a great lifestyle business with no customers, employees and investors around that...

Blackstone4 9y ago
Have you done this? If so it would be great to get your perspective
- SirLJ 9y ago
  Yes, I am doing it as a side project and I am looking to retire in a few years and live off that...
  - sjroot 9y ago
    I second the above comment; you should write about the process and how it is working out for you.
  - gricardo99 9y ago
    I'll third this comment. Some more details on what you trade, where you trade, how long you've been doing it, performance metrics, etc... would be fascinating.
    - SirLJ 9y ago
      As you can see I am paranoid, because the more people trading the same strategy, the less effective it becomes, not to mention, if someone knows your trading strategy it can trade against you... it’s a zero sum game after all... All that said, here are the 2 most important advises I wish someone told me when I started years ago: Have an iron clad risk management strategy for your portfolio, e.g. if you are willing to risk 1% of your capital on any given day and tomorrow happens to be the Black Monday and all stock go down 50% you still have to be sure you’ll loose only 1% if you have to sell everything... This is where the back data comes into play – the goal is to back test not how much money you are going to make, but how much money you are going to loose in the worst case scenario if you have to liquidate everything and move to all cash. If you have this working 100%, you just need a trading strategy with a minimal edge and you’ll make money in the long run in the market and the compounding effect will really make you a rich person (rich person to me is someone who makes more money then he spends, WITHOUT working more than 1 hour a day) And the second advice is never ever trust and buy a trading strategy from someone, the fact he is selling or "teaching" a trading strategy means it is not working and he is trying to make some money by scamming people and selling the dream, all those trading educators cannot make money trading and that’s why they are coming with up with those fake trading courses... just check this website to see the magnitude of this scam and how people are loosing their life savings... I just don’t know why FBI, SEC and the government is not doing something to stop those guys... https://www.tradingschools.org/ https://www.tradingschools.org/ Good luck and as I said before, just treat is as a hobby at first and spend the time testing and you’ll find something that is working for you... EDIT: some spelling errors fixed.
      - princeb 9y ago
        > more people trading the same strategy, the less effective it becomes you should pick a more scalable strategy, the kind of strategy that becomes more profitable the more you talk your own book.
- dsacco 9y ago
  This commenter comes into every single thread about trading and talks about buying data from ebay, then consistently demonstrates that he doesn't know the first thing about due diligence on financial data. Each time I try to ask him about his data quality or methodology at even a high level, he responds by accusing me of wanting to steal his work or stop the democratization of data. I'm going to reiterate this right now: you are not going to find data valuable enough for trading insights on ebay. Go look at the prices of historical data for various time resolutions at TickData or CBOE Livevol and then ask yourself if cheap, competitive data on ebay is too good to be true. If the data is competitive, it's expensive. If it's not competitive, you shouldn't be paying for it, especially not from ebay. The first time I read about him doing this I was puzzled, now I'm getting increasingly frustrated because it's blatantly false information.
  - SirLJ 9y ago
    Unless you are day trading you don't need such a granular data format, so please stop saying you need to spend thousands and thousands of dollars to be able to back test a trading strategy
    - dsacco 9y ago
      If your data doesn't need to operate on an intraday scale, you can get perfectly accurate real time or historical data for free just by using a reputable broker like Interactive Brokers. At that point there's no need to buy the data on ebay, so I still don't understand why you ever would.
      - SirLJ 9y ago
        Actually I have checked IB API and it is very restrictive, e.g. you cannot request let say all daily data for all symbols for 2007 for example or even for one day for that matter...
    - lz400 9y ago
      As far as I understand historical daily data is easy to get from yahoo, google, etc. Data is only difficult to find/expensive when you need tick data.
mi100hael 9y ago
Mostly a matter of trust. I trust Quantopian more than I trust some random asshole on eBay purporting to sell accurate historical data. Plus, Quantopian is convenient.
- SirLJ 9y ago
  This is the cheapest data I can find and you can do random checks to verify the data... if you know a cheaper or even better a free place please advice...
kevstev 9y ago
Because they do so much work upfront for you. I worked in algorithmic trading for a bit over 10 years but left in 2014. I spent a few months in my spare time building out a trading and backtesting platform, pulling data off of yahoo finance, connecting to Interactive Brokers via their C++ API, etc. It was all very slow and tedious, and during my googling one day, I come across quantopian. I felt like an idiot- they already had free access to morningstar with a decent API around it, tons of other datasets you could subscribe to, and a fully fleshed out backtesting platform with risk measures, pretty graphs, etc. It would have taken me months-years to get to that point. Shortly after they also included integrations to IB and Robinhood so you could very easily take your ideas and actually live trade them. I immediately stopped development on my trading platform and just started using Q's. Q could potentially take my algorithm and start using it themselves, though they actually put money into algorithms they think are promising and share the profits with you. That's a small risk IMHO. Hackers and the like... I did this stuff for 10+ years. People WAY over estimate the value of this code- you have an idea, you backtest, hope it works, and then you put it in the wild. I have never seen an algo that is a real guaranteed money maker (aside from arbitrage/hft stuff). What are these hackers going to do when they take a 10% loss one month and don't understand why? Some "signals" can be used in-line fairly generically with other algorithms to enhance their performance, but I will still bet on the guy that knows/understands the algorithms to not lose his shirt, then some hacker dude that likely has no capital to begin with and may not even understand the basics of financial markets. One thing you seem to overlook is that it is one thing to go buy a bunch of historical data off ebay, but you need to constantly update that if you are going to live trade- Q handles that part as well. If I was looking to make a business out of this, I would build my own platform. But using it as a research platform to invest my own money, Quantopian is awesome.
- SirLJ 9y ago
  My experience is unfortunately different, I found the data for some delisted stocks like HTZ missing which will massively screw the past results due to the survivorship bias...
  - dsacco 9y ago
dglass 9y ago
Not everyone can build their own backtesting tool. I played around with quantopian for a little while and did some live trading with quantopian + robinhood and I never would have been able to do that without quantopian
- SirLJ 9y ago
  I am not a developer, but using my brokers API, examples and python, it took me few months to build a very robust and automatic trading system... I did learn python by back testing my trading ideas... To use Quantopian you still have to learn python, so I am not sure where is the benefit, considering all the problems mentioned here...
  - davewasthere 9y ago
    Or C#

by SirLJ 9y ago

Blackstone4 9y ago

Have you done this? If so it would be great to get your perspective

SirLJ 9y ago
Yes, I am doing it as a side project and I am looking to retire in a few years and live off that...
- sjroot 9y ago
  I second the above comment; you should write about the process and how it is working out for you.
- gricardo99 9y ago
  I'll third this comment. Some more details on what you trade, where you trade, how long you've been doing it, performance metrics, etc... would be fascinating.
  - SirLJ 9y ago
    As you can see I am paranoid, because the more people trading the same strategy, the less effective it becomes, not to mention, if someone knows your trading strategy it can trade against you... it’s a zero sum game after all... All that said, here are the 2 most important advises I wish someone told me when I started years ago: Have an iron clad risk management strategy for your portfolio, e.g. if you are willing to risk 1% of your capital on any given day and tomorrow happens to be the Black Monday and all stock go down 50% you still have to be sure you’ll loose only 1% if you have to sell everything... This is where the back data comes into play – the goal is to back test not how much money you are going to make, but how much money you are going to loose in the worst case scenario if you have to liquidate everything and move to all cash. If you have this working 100%, you just need a trading strategy with a minimal edge and you’ll make money in the long run in the market and the compounding effect will really make you a rich person (rich person to me is someone who makes more money then he spends, WITHOUT working more than 1 hour a day) And the second advice is never ever trust and buy a trading strategy from someone, the fact he is selling or "teaching" a trading strategy means it is not working and he is trying to make some money by scamming people and selling the dream, all those trading educators cannot make money trading and that’s why they are coming with up with those fake trading courses... just check this website to see the magnitude of this scam and how people are loosing their life savings... I just don’t know why FBI, SEC and the government is not doing something to stop those guys... https://www.tradingschools.org/ https://www.tradingschools.org/ Good luck and as I said before, just treat is as a hobby at first and spend the time testing and you’ll find something that is working for you... EDIT: some spelling errors fixed.
    - princeb 9y ago
      > more people trading the same strategy, the less effective it becomes you should pick a more scalable strategy, the kind of strategy that becomes more profitable the more you talk your own book.
dsacco 9y ago
This commenter comes into every single thread about trading and talks about buying data from ebay, then consistently demonstrates that he doesn't know the first thing about due diligence on financial data. Each time I try to ask him about his data quality or methodology at even a high level, he responds by accusing me of wanting to steal his work or stop the democratization of data. I'm going to reiterate this right now: you are not going to find data valuable enough for trading insights on ebay. Go look at the prices of historical data for various time resolutions at TickData or CBOE Livevol and then ask yourself if cheap, competitive data on ebay is too good to be true. If the data is competitive, it's expensive. If it's not competitive, you shouldn't be paying for it, especially not from ebay. The first time I read about him doing this I was puzzled, now I'm getting increasingly frustrated because it's blatantly false information.
- SirLJ 9y ago
  Unless you are day trading you don't need such a granular data format, so please stop saying you need to spend thousands and thousands of dollars to be able to back test a trading strategy
  - dsacco 9y ago
    If your data doesn't need to operate on an intraday scale, you can get perfectly accurate real time or historical data for free just by using a reputable broker like Interactive Brokers. At that point there's no need to buy the data on ebay, so I still don't understand why you ever would.
    - SirLJ 9y ago
      Actually I have checked IB API and it is very restrictive, e.g. you cannot request let say all daily data for all symbols for 2007 for example or even for one day for that matter...
  - lz400 9y ago
    As far as I understand historical daily data is easy to get from yahoo, google, etc. Data is only difficult to find/expensive when you need tick data.

mi100hael 9y ago

Mostly a matter of trust. I trust Quantopian more than I trust some random asshole on eBay purporting to sell accurate historical data. Plus, Quantopian is convenient.

SirLJ 9y ago
This is the cheapest data I can find and you can do random checks to verify the data... if you know a cheaper or even better a free place please advice...

kevstev 9y ago

Because they do so much work upfront for you. I worked in algorithmic trading for a bit over 10 years but left in 2014. I spent a few months in my spare time building out a trading and backtesting platform, pulling data off of yahoo finance, connecting to Interactive Brokers via their C++ API, etc. It was all very slow and tedious, and during my googling one day, I come across quantopian. I felt like an idiot- they already had free access to morningstar with a decent API around it, tons of other datasets you could subscribe to, and a fully fleshed out backtesting platform with risk measures, pretty graphs, etc. It would have taken me months-years to get to that point. Shortly after they also included integrations to IB and Robinhood so you could very easily take your ideas and actually live trade them. I immediately stopped development on my trading platform and just started using Q's. Q could potentially take my algorithm and start using it themselves, though they actually put money into algorithms they think are promising and share the profits with you. That's a small risk IMHO. Hackers and the like... I did this stuff for 10+ years. People WAY over estimate the value of this code- you have an idea, you backtest, hope it works, and then you put it in the wild. I have never seen an algo that is a real guaranteed money maker (aside from arbitrage/hft stuff). What are these hackers going to do when they take a 10% loss one month and don't understand why? Some "signals" can be used in-line fairly generically with other algorithms to enhance their performance, but I will still bet on the guy that knows/understands the algorithms to not lose his shirt, then some hacker dude that likely has no capital to begin with and may not even understand the basics of financial markets. One thing you seem to overlook is that it is one thing to go buy a bunch of historical data off ebay, but you need to constantly update that if you are going to live trade- Q handles that part as well. If I was looking to make a business out of this, I would build my own platform. But using it as a research platform to invest my own money, Quantopian is awesome.

SirLJ 9y ago
My experience is unfortunately different, I found the data for some delisted stocks like HTZ missing which will massively screw the past results due to the survivorship bias...
- dsacco 9y ago

dglass 9y ago

Not everyone can build their own backtesting tool. I played around with quantopian for a little while and did some live trading with quantopian + robinhood and I never would have been able to do that without quantopian

SirLJ 9y ago
I am not a developer, but using my brokers API, examples and python, it took me few months to build a very robust and automatic trading system... I did learn python by back testing my trading ideas... To use Quantopian you still have to learn python, so I am not sure where is the benefit, considering all the problems mentioned here...
- davewasthere 9y ago
  Or C#