Quants at home

AMD
supppi

Go to company page AMD

supppi
Apr 10 18 Comments

People that work in quantitative trading/ development. What advice do you have to make money at home where you don’t have the amount of data and capital to deploy as you do at your work place? Do you guy’s just invest in index funds or try to apply the stuff you do at work to your personal investments? What do y’all think about a trading bot and are there some available to use to the public that aren’t going to blow up my account lol

I’ve always wanted to get into that sector so another question i have is do you guys have Electrical engineers working on fpgas and stuff like that or mainly software engineers and do you recommend trying to make the switch? And if you have a degree in EE would you recommend and masters in finance or something like CS?

Two Sigma Citadel BlackRock
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  • Citadel
    iwe8ck

    Go to company page Citadel

    iwe8ck
    We just invest in index funds.
    Apr 10 2
  • I am not a quant but one thing I have learned from the painful mistakes of others is that it is extremely difficult to beat the market on the long run unless you have some undue advantage.

    You may be confident about your strategy, but to have it work for all the historical scenarios is difficult and result in too much tight modelling if you try. Even when you account for every possible historical event, there WILL be an event in future that you did not account for and screw up your PnL.

    There are hundreds of case studies on how seasoned and highly successful fund managers get burnt when their time comes.

    My take is - Don't try to be too smart and focus on value investing and DCA. Of course, this is just an opinion and people will have counter arguments on this investment style as well.
    Apr 10 2
    • CDW
      BaiJo

      Go to company page CDW

      BaiJo
      fair enough. how do those hedge funds and prop shops consistently make money tho?
      Apr 10
    • They have a few advantages like CoLo exchange, ultra low latency platforms etc.
      Even after all this, hedge fund business is considered a cyclic industry. Meaning, they typically make astronomical profits some years followed by losses (and firing of corresponding staff). Rinse and repeat
      Apr 10
  • Citadel person is right, we just invest in index funds.
    Apr 13 3
  • Don't
    Apr 11 1
  • The two I mentioned are still active and evolving but they are not bots in themselves. Collective2 is like a marketplace of 'strategies' that you can subscribe too. Adaptrade is a strategy generator and you have to do the work of plugging in the script output to your ninjatrader or tradestation software.

    There's other service that make it super easy for you to dump your money into and they just take care of the rest, saying they have advance AI doing everything but again, you no control or insight into that.

    If you want to start your own bot, there's a lot to learn and do:
    1. Understand the basics of trading and progress into what it takes to develop a trading strategy of your own. You can spend months, even years on this, but you don't have to wait that long to start trading. The key thing is backtesting your strategies. If you don't always backtest, then you're just gambling.
    2. Code up the services/infra to plug in your strategy and automatically place trades into your broker. Brokers that have APIs for this are few, but some are: Interactive Brokers, Tradestation, E-Trade. There are others but these are the 3 I found that are accessible enough for my liking. Make a simple bot that makes random trades and have trade against a simulated account through this system to test that thr system is working. I like to use cloud services for this. For example, have a function to read/stream price data and store in a DB. Have different events fire for different time frames you care about (1 min, 5 min, 15 min, EOD, etc). Have another function that's triggers on these price events and load your active strategy and have it evaluate the price and generate a singal (buy, sell, do nothing, etc). The strategy can be stored in a db as well.
    3. Go to the next level and build a dashboard that surfaces all data and metrics on this system, letting you see how your bot is doing over time, have buttons to start/stop trading, and switch trading strategies.
    4. Even more next level is have a separate service that generates new trading strategies for you everyday and backtests them. Your dashboard should display this and make it easy for you to swap strategies or even run multiple strategies in parallel.
    Apr 10 1