4 ms·

Quant trading is harder than people assume - really, really, hard. Nearly everything you can think of has already been done, and is being done within latency li

Quant trading is harder than people assume - really, really, hard. Nearly everything you can think of has already been done, and is being done within latency limits you are priced out of as a retail guy. So you have to get creative, and if you want it to keep working, you can't tell anyone about it. Ever.

anonu 8y ago
Agreed. And it's not just latency that puts the average guy at a disadvantage. It's also access to the market and access to data which are hard to obtain. The beauty in all this is that 1000s of people keep trying... But only a select few, less than 1/100 of 1 percent of market participants succeed in making reasonable profits
thisisit 8y ago
I think it is important to understand that low latency = HFT. Because HFT is data driven it is part of Quant trading. But not all Quant Trading requires or is being done at low latency limits.
- jkaptur 8y ago
  A great point. When I worked in the industry, the trading (of exotic products) was actually done over the phone and via e-mail. Very much quant-driven, but about as low-frequency as it gets!
Xcelerate 8y ago
> Nearly everything you can think of has already been done I find this hard to believe. There's entire fields of research based around AI now and an endless number of ideas that have yet to be tried/implemented. There simply aren't enough people working at hedge funds to cover them all.
- pakitan 8y ago
  A more accurate statement will be "Nearly everything you can think of has already been done or will be done soon and since this is a zero-sum game, the expected profit in the long term from quant trading is approaching zero"
FundThrowaway 8y ago
Let me let you in on a little secret of the quant world, it is easier than you assume at least in terms of idea generation. Every fund I've ever been with the vast majority of strategies are sourced from academic papers, you don't need to think up new and novel ideas.
- pakitan 8y ago
  If every fund is getting the majority of their strategies from the same academic papers, that must do wonders for the profit :)
  - FundThrowaway 8y ago
    The edge is found usually in the details of the implementation of a strategy.
- Bromskloss 8y ago
  Do you have an example of such an idea – maybe one that is no longer of use?

anonu 8y ago

Agreed. And it's not just latency that puts the average guy at a disadvantage. It's also access to the market and access to data which are hard to obtain. The beauty in all this is that 1000s of people keep trying... But only a select few, less than 1/100 of 1 percent of market participants succeed in making reasonable profits

thisisit 8y ago

I think it is important to understand that low latency = HFT. Because HFT is data driven it is part of Quant trading. But not all Quant Trading requires or is being done at low latency limits.

jkaptur 8y ago
A great point. When I worked in the industry, the trading (of exotic products) was actually done over the phone and via e-mail. Very much quant-driven, but about as low-frequency as it gets!

Xcelerate 8y ago

> Nearly everything you can think of has already been done I find this hard to believe. There's entire fields of research based around AI now and an endless number of ideas that have yet to be tried/implemented. There simply aren't enough people working at hedge funds to cover them all.

pakitan 8y ago
A more accurate statement will be "Nearly everything you can think of has already been done or will be done soon and since this is a zero-sum game, the expected profit in the long term from quant trading is approaching zero"

FundThrowaway 8y ago

Let me let you in on a little secret of the quant world, it is easier than you assume at least in terms of idea generation. Every fund I've ever been with the vast majority of strategies are sourced from academic papers, you don't need to think up new and novel ideas.

pakitan 8y ago
If every fund is getting the majority of their strategies from the same academic papers, that must do wonders for the profit :)
- FundThrowaway 8y ago
  The edge is found usually in the details of the implementation of a strategy.
Bromskloss 8y ago
Do you have an example of such an idea – maybe one that is no longer of use?