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Call me cynical but this is a bad idea, and not for Quantopian either. It is well known that only a small fraction of traders ever end up making money consisten
by SeanDav 14y ago
Call me cynical but this is a bad idea, and not for Quantopian either. It is well known that only a small fraction of traders ever end up making money consistently.
Effectively Quantopian get a vast and relatively cheap set of researchers/traders to develop strategies and they can simply cherry pick and front run the most successful. This means that the actual developers of the successful strategy will quickly be muscled out.
Of course Quantopian would deny they would ever do this but they have full access to all your code and results and can do what they like with it. You really think a "Wall Street" company is going to be happy with your $nn a month subscription fee when they can see you are running a strategy that when scaled up a bit could make so much more?
- yummyfajitas 14y agoThis argument applies to any brokerage, and is why brokerages are highly regulated and subject to extreme SEC scrutiny. Once Quantopian offers you a way to trade (either by becoming or partnering with a brokerage), they will certainly be subject to the same rules. Incidentally, "cherry pick...the most successful" is not that easy. In a universe of many traders, a few will succeed solely by random chance.
- SeanDav 14y agoRegulated by the SEC does not mean much at all. All the major trading scandals have occurred in institutions regulated by the SEC. Trading institutions can do pretty much what they want - even today there is a huge amount of insider trading and market manipulation despite all the regulation. For example the latest LIBOR scandal. Not sure I agree with your second point either. It is the same point made by Nassim Nicholas Taleb in his book Fooled by Randomness. That theory works fine if you think markets are random. They are are not, they are just hard to understand. Having said that I agree that in the very short term it is impossible to separate a strategy making money randomly from one that is fundamentally sound.
- NateDad 14y agoIt's 8 guys hacking in a small office in Boston. Hardly a "Wall Street" company. (disclosure: I've worked with half the team before... and they're all the best devs I've ever worked with. I do not work for Quantopian.)
- SeanDav 14y agoThey are being backed by GETCO, which most definitely is a "Wall Street" company...
- jik 14y agoThere are all sorts of reasons why GETCO might have chosen to back us (I work for Quantopian), but I can say with certainty that "Steal algorithms from the people who wrote them" wasn't one of them. GETCO really doesn't need to steal other people's algorithms.
- SeanDav 14y agoI may well be maligning you but on the other hand I have over 20 years experience working as a trader/researcher and developer in the finance industry for tier1 investment banks as well as hedge funds and have seen a lot. You are not doing this for "the greater good" you are doing this to make money, as is GETCO et al. Stealing algorithms and protection of algorithms are fundamental issues in the industry. I would suggest you guys try to assuage fears about this by doing as much as possible to prove your true intentions.
- jik 14y agoYou are not doing this for "the greater good" you are doing this to make money, as is GETCO et al. Yes, we're doing this to make money. However, making money and doing good in the world are not mutually exclusive, and making money and stealing are not inextricably linked. We believe we can make money at this, or we wouldn't be doing it. We intend to make money in an ethical way, giving our users the tools they want and respecting and protecting the privacy of their intellectual property. Stealing algorithms and protection of algorithms are fundamental issues in the industry. I entirely agree, but it does not follow that everyone doing algorithmic trading is a thief or that the only way to make money from algorithmic trading is to be a thief.