Referring to trading stocks, options, crypto etc using algos, can be ML or rules-based with your personal money. Is it a waste of time given how competitive the market is, Two Sigma geniuses running everything, or can it be profitable if you're on your own?#personalfinance
Depends on your time horizon For short term trading you’re just wasting your time. If you’re good, you’ll make way more money at an established shop. For long term investing you can still have a decent chance to beat indexers
It could be profitable for small investments (< few millions). IDK if two sigma, citadel, and the like care about smaller opportunities. Long story short, suckerfish swim and feed close to sharks. The premise is not mutually exclusive.
It can be done. I’m about to quit my day job because I’ve made more money with algotrading, and I know a handful of others who have done it as well. I bet if most people here researched algotrading instead of leetcoding after work, they would succeed. It’s about as hard as getting to Grandmaster in a video game or benching 315 if you started off scrawny. Takes a couple thousand hours, but it’ll happen one day if you put in the work. If you can find a mentor, someone who you know actually trades for a living and isn’t full of shit, it’ll save you a couple years. Almost nothing works. Good luck.
Can you be my mentor?
How much havw you made?
Im considering getting into it, but is it worth the ROI? Are there any better passive income sources
My buddy at two sigma told me yes it’s waste of time for individuals to get into this business.
Algo Developer myself and I can tell you its a waste of time for pretty much 99.9% of people.
Whats a better side income source?
Selling options. It’s not sexy but statistically you will walk away net profitable.
The problem is that engineers who try this immediately jump to the coding side first thinking they can “just use ML” and solve their problems. You need to learn how to trade like a professional, understand financial theory, economic theory, behavioral economics, etc. It takes hundreds if not thousands of hours. I did a technical undergrad and a non technical (mgmt/finance) grad degree where I was mentored by professional traders and hedge fund managers. I learned an insane amount and continued my learning even beyond the walls of grad school. Then after you’ve learned the stuff listed above, you need to think creatively, generate ideas, code them up, back test, simulate, etc. The truth is that it takes ALOT of time, and most people don’t know where to start, or don’t put in enough time, or waste their time getting bogged down in finding the perfect framework and focusing on the CS side rather than the finance side. So yes it’s possible, but you need to put thousands of hours into it and allow knowledge to remove the mysticism that surrounds financial markets/trading for most people.
There is a ton to learn. This is not a good side hustle. I have an MBA from an M7 where I studied behavioral finance, economics, etc. That's in addition to a top-3 physics undergrad. I also taught advanced corporate finance to B school students, brought in the founding team for EWT (now Virtu Financial), built trading systems for some of the largest futures markets, worked in a hedge fund (long short) for a few years, and advised several high freq trading and quant shops. The problem is even running a successful automated trading operation is not a solo operation these days. So can you learn this and do it successfully? Yes, of course, but you are much better off learning it as part of a company that is doing it already, and finding and honing your edge while getting paid, than trying to automate tens of thousands of hours of learnings that you don't have yet and scaling them up. Despite my background, I work in FAANG now and would not try running my own trading systems as a side hustle.
This could be profitable, 10-15 years back. There just aren't many of these kind of low hanging fruit opportunities around these days. Not going to say it is impossible, but the dumb simple shit has all been arbed away long ago. These days, if it makes money, it is probably exposed to risk factors that may or may not be obvious at first glance but may very well smack you hard after a bit.