6 ms·

How does one get started? I feel like I have a lot of the math background, but approaching putting this toward an actual market feels opaque.

by tel 6y ago

jxm262 6y ago
Random question but is this Tel from the east coast? (wont name the city to respect anonymity). Think we worked together before :) Depends how new you are to it all, but assuming you just know basic trading stuff (what a bid/offer is, what options greeks are, etc..). Everything I do is stat arb type of trades. My path won't be the same as yours, but here's how I started. What I did... - read literally every link and topic under https://www.investopedia.com https://www.investopedia.com (the education tab -> investing trading section on the right) - quantopian.com - look under the learning tab. I went through all the material - literally all of it. There's a series of Lectures that explains a ton - quantconnect.com - I went through all their tutorials. Read through the existing strategies to get a feel for everything and gain insights - https://www.quantconnect.com/tutorials/strategy-library https://www.quantconnect.com/tutorials/strategy-library - Absorbed almost everything Ernie Chan has written. This was the first book that got me interested in all this - https://www.amazon.com/Quantitative-Trading-Build-Algorithmic-Business-ebook/dp/B001FA0GGC https://www.amazon.com/Quantitative-Trading-Build-Algorithmi... I read a _ton_ and played around with lots and lots of data to try and get my systems working. Still no where near where I'd like to be, but been profitable since the beginning (minus a giant loss on some gambles I took - I no longer trade discretionary because of this). The links I pasted above are what I'd consider the "easy" part of all this, anyone can read and learn. Learning the more in-depth stuff around specific topics is harder, but I have a bunch of books (willing to share some recommendations if you need). Once you progress, you'll find specific areas you're interested in (equity options, commodity futures, spread trades, fixed income/bonds, etc.. ).
- pmiller2 6y ago
  Has all that paid off for you? Are you seeing any alpha based on strategies you've developed?
  - jxm262 6y ago
    yes :) edit: think I should follow up with a comment/question I ask myself alot. Is all the work/time worth it? In my case, I'd say yes, because I've always had an interest in finance and literally would be reading + working with markets on the side for fun anyway. If I think of all the effort poured into this vs say working for some large tech company... I'd probably say just go work the high paying tech job. Obviously you can make money in the markets, but the tradeoff for keeping your sanity is a very real question you have to ask yourself.
    - pmiller2 6y ago
      Very cool. It sounds like you're basically treating this as a profitable hobby. How much alpha are you achieving, and how many hours a week would you say you put into it? Are you trading equities only or options and other derivatives as well?
      - jxm262 6y ago
        it's definitely more than a side hobby. I probably put about 20 hours/week while also working 40 hours my normal work. I've also had stints where I worked on trading full time (6 months+ stretch). That's why I sent my follow up comment on "is it worth it". If your serious about trading, you need to understand the level of commitment. Also add the stress levels from when you inevitably hit bumps in the road (my large loss was a huge damage to my psyche at the time). It's not for everyone. To answer your question, I started in equities but moved to commodity and index futures/options.
- tel 6y ago
  Oh dang! Yes, hey! Nice to hear from you—I'll send you an email :)
theincredulousk 6y ago
https://xkcd.com/1570/ https://xkcd.com/1570/ The important math for understanding the foundations of finance and business isn't advanced math. It is accounting - primarily addition, subtraction and simple algebra or calculus 101 for things like interest calculations or discounted value modeling. This basic math also underpins the "fundamentals" of business used in objective, common-sense investing - the kind Warren Buffett is fond of. Also, "stocks" and math are a classic "the map is not the territory" situation. Math describes stocks and business performance very well but does not define it. A machine learning algorithm trained on historical price data in concert with differential equations of 1,000 variables will historically do no better at investing than buying and holding index funds. Technical Analysts "quants" would disagree, but alas: https://www.bloomberg.com/news/articles/2020-05-02/after-quant-bust-2020-comes-a-reckoning-for-stock-math-wizzes https://www.bloomberg.com/news/articles/2020-05-02/after-qua... So the thing to focus on isn't going from math -> stock trading. It is to learn accounting and business and basic stock market concepts. Eventually a math background will help, but it's support not the foundation.
- dllthomas 6y ago
  11:15, restate my assumptions: ...

How does one get started? I feel like I have a lot of the math background, but approaching putting this toward an actual market feels opaque.

by tel 6y ago

How does one get started? I feel like I have a lot of the math background, but approaching putting this toward an actual market feels opaque.

jxm262 6y ago

Random question but is this Tel from the east coast? (wont name the city to respect anonymity). Think we worked together before :) Depends how new you are to it all, but assuming you just know basic trading stuff (what a bid/offer is, what options greeks are, etc..). Everything I do is stat arb type of trades. My path won't be the same as yours, but here's how I started. What I did... - read literally every link and topic under https://www.investopedia.com https://www.investopedia.com (the education tab -> investing trading section on the right) - quantopian.com - look under the learning tab. I went through all the material - literally all of it. There's a series of Lectures that explains a ton - quantconnect.com - I went through all their tutorials. Read through the existing strategies to get a feel for everything and gain insights - https://www.quantconnect.com/tutorials/strategy-library https://www.quantconnect.com/tutorials/strategy-library - Absorbed almost everything Ernie Chan has written. This was the first book that got me interested in all this - https://www.amazon.com/Quantitative-Trading-Build-Algorithmic-Business-ebook/dp/B001FA0GGC https://www.amazon.com/Quantitative-Trading-Build-Algorithmi... I read a _ton_ and played around with lots and lots of data to try and get my systems working. Still no where near where I'd like to be, but been profitable since the beginning (minus a giant loss on some gambles I took - I no longer trade discretionary because of this). The links I pasted above are what I'd consider the "easy" part of all this, anyone can read and learn. Learning the more in-depth stuff around specific topics is harder, but I have a bunch of books (willing to share some recommendations if you need). Once you progress, you'll find specific areas you're interested in (equity options, commodity futures, spread trades, fixed income/bonds, etc.. ).

pmiller2 6y ago
Has all that paid off for you? Are you seeing any alpha based on strategies you've developed?
- jxm262 6y ago
  yes :) edit: think I should follow up with a comment/question I ask myself alot. Is all the work/time worth it? In my case, I'd say yes, because I've always had an interest in finance and literally would be reading + working with markets on the side for fun anyway. If I think of all the effort poured into this vs say working for some large tech company... I'd probably say just go work the high paying tech job. Obviously you can make money in the markets, but the tradeoff for keeping your sanity is a very real question you have to ask yourself.
  - pmiller2 6y ago
    Very cool. It sounds like you're basically treating this as a profitable hobby. How much alpha are you achieving, and how many hours a week would you say you put into it? Are you trading equities only or options and other derivatives as well?
    - jxm262 6y ago
      it's definitely more than a side hobby. I probably put about 20 hours/week while also working 40 hours my normal work. I've also had stints where I worked on trading full time (6 months+ stretch). That's why I sent my follow up comment on "is it worth it". If your serious about trading, you need to understand the level of commitment. Also add the stress levels from when you inevitably hit bumps in the road (my large loss was a huge damage to my psyche at the time). It's not for everyone. To answer your question, I started in equities but moved to commodity and index futures/options.
tel 6y ago
Oh dang! Yes, hey! Nice to hear from you—I'll send you an email :)

theincredulousk 6y ago

https://xkcd.com/1570/ https://xkcd.com/1570/ The important math for understanding the foundations of finance and business isn't advanced math. It is accounting - primarily addition, subtraction and simple algebra or calculus 101 for things like interest calculations or discounted value modeling. This basic math also underpins the "fundamentals" of business used in objective, common-sense investing - the kind Warren Buffett is fond of. Also, "stocks" and math are a classic "the map is not the territory" situation. Math describes stocks and business performance very well but does not define it. A machine learning algorithm trained on historical price data in concert with differential equations of 1,000 variables will historically do no better at investing than buying and holding index funds. Technical Analysts "quants" would disagree, but alas: https://www.bloomberg.com/news/articles/2020-05-02/after-quant-bust-2020-comes-a-reckoning-for-stock-math-wizzes https://www.bloomberg.com/news/articles/2020-05-02/after-qua... So the thing to focus on isn't going from math -> stock trading. It is to learn accounting and business and basic stock market concepts. Eventually a math background will help, but it's support not the foundation.

dllthomas 6y ago
11:15, restate my assumptions: ...