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> The gatekeeping is what kept this specialized for the most part. It certainly kept the vast majority of retail out, but I disagree that this was the main cau

> The gatekeeping is what kept this specialized for the most part. It certainly kept the vast majority of retail out, but I disagree that this was the main cause of specialization. I think that the number of lone geniuses who could've beat the market using algo trading is a number approaching zero. It's true that you don't need a PhD, or even higher education, as the math you need can be entirely self taught. However, you need plenty of specialized knowledge to avoid the accidental discharge of the vast number of very expensive footguns that litter the landscape. This knowledge can be gained from literature, but without having someone streetwise as a guide, it's going to be very difficult to discern genuine insight from wishful thinking.

mruts 7y ago
Honestly, it’s pretty easy to create a rough approximation of many popular hedge fund strategies. Like on Quantopian, it’s pretty easy to whip up a simple factor strategy in a couple hours. The returns aren’t bad, either. The part that is hard are trading costs and slippage. But assuming that retail investor’s capital is relatively small and no trading costs (Alpaca provides this), an individual can do pretty well. The parts that are hard for hedge funds is slippage, illiquidity of assets, trading costs, and client demands. As an individual you really don’t have to worry about those things and consequentially things become much easier. The only downside is that it’s harder to get as much cheap leverage as the big guys. Also some (HFT) strategies are off limits to individuals, but that’s fine, because HFT really isn’t a good way to make money in the first place.