Careful... If I was making a lot of money via an algorithm; I'd want to keep it secret. Otherwise, once other people knew about my algorithm, they'd try to game the system.
Ask HN: Anyone making money through algorithmic trading?
71–80 of 254 posts
Re: Ask HN: Anyone making money through algorithmic trading?
#72I don't recommend algorithmic trading. Interactive Brokers shows that less than half of their forex traders are profitable and it's very consistent: https://www.interactivebrokers.com/en/index.php?f=3731
If you end up doing it then do it with a very small amount of money and scale up SLOWLY. I don't think you will have fun in cryptocurrency markets either. They are ridiculously volatile and your bot will probably be doing nothing for a while as it waits for the price to come back.
Re: Ask HN: Anyone making money through algorithmic trading?
#73Earlier quoted context omitted.
if you've lost 100k, you had 100k to spare. agree it was an expensive lesson.
if you've lost 100k, you had 100k to spare Not if you're leveraging! For an extreme example, this guy lost $210k of borrowed money: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=5934&s...
Another example is Chris Sacca, who burned through $16 million - $12 million in paper gains, and $4 million in borrowed money. From [1]:
Starting with around $10-$20,000 in what were college loans, Sacca realized that brokers weren’t accounting for margin usage on a real-time basis. The result was that even though firms were only allowing 50% margin, as long as a customer closed a trade before the trade settled, T+3, and showed proper equity in the account, positions larger than 50% margin usage could be opened.
Picking winners of stocks that by Sacca’s account had risen 40x, and betting with positions well above his margin requirements, his account grew to $12 million in 18 months. But, as we all know, the record levels of the Nasdaq and the dot com bubble of that time eventually burst....When it did burst, and even though the damage was from holding just two stocks, Sacca found himself in the hole with a $4 million negative balance.
[1] https://www.financemagnates.com/forex/brokers/chris-saccathe...
Re: Ask HN: Anyone making money through algorithmic trading?
#74Yeah I made 21.4% in 2017. I wrote my own algorithms and did back-testing with custom ruby code and data from ycharts.com ($) and brokerage.tradier.com (free if you have an account). Ruby is a weird choice in this area as most probably use r or python, but I love ruby. The key for me is to focus on long-term trading strategies that are at least a year long. The HFT guys and people who spend their time on quantopia an…
I can't tell if you are being sarcastic, the S&P was up slightly more than that in 2017...
Not being sarcastic or proud, I know I (barely) lost. Just stating the facts. Obviously over a long term horizon of like 10 yrs I expect to beat the S&P or I would be spending my time elsewhere.
Re: Ask HN: Anyone making money through algorithmic trading?
#75I don't recommend algorithmic trading. Interactive Brokers shows that less than half of their forex traders are profitable and it's very consistent: https://www.interactivebrokers.com/en/index.php?f=3731 If you end up doing it then do it with a very small amount of money and scale up SLOWLY. I don't think you will have fun in cryptocurrency markets either. They are ridiculously volatile and your bot will probably be…
Forex seems like a market where the average trader would see less success than something like equities because Forex seems zero-sum at best. Do they have these statistics for other markets?
Re: Ask HN: Anyone making money through algorithmic trading?
#76Earlier quoted context omitted.
> If someone says their algorithm relies on some sort of TA, run for the hills. Care to explain? I'm genuinely curious as I've had some success in this area. Curious if I should be aware of something that I'm not...
Fundamentally, the history of a price has nothing to do with its future price. The laws of nature do not care if you are on a bull run. So TA is completely bunk in that regard. However, obviously many people do rely on TA, which means TA is influencing the price (you can beat their TA algo with your own TA algo). The problem is, you never really know what everyone else is doing. Relying on TA amounts to playing rock-…
Makes sense, thanks for the explanation.
Re: Ask HN: Anyone making money through algorithmic trading?
#77When trades are placed using a fixed setup of rules or algorithms it is called algorithmic trading. HFT is a type of algo trading where latency is one of the important rules. So, while all HFT trades are algo trades, reverse isn't true. AFAIK some(maybe a lot) of algorithm or quant firms hire people who can read the latest investment research, form a hypothesis and test out the hypothesis to see whether there is a wi…
> If someone says their algorithm relies on some sort of TA, run for the hills. Care to explain? I'm genuinely curious as I've had some success in this area. Curious if I should be aware of something that I'm not...
TA indicators have number of flaws.
One of the biggest flaws is that TA indicators tend to repaint. So an awesome winning MA crossover in hindsight might never really execute during real trading.
Additionally using TA for trading also involves self-fulfilling prophecies. And if there are any markets which follow this prophetic tendencies - it is cryptocurrency.
Re: Ask HN: Anyone making money through algorithmic trading?
#78Efficient market theory prevents predicting prices to a certain extent. But algorithms can take out emotions in trading and can limit your losses.
But efficient markets are not a law of nature. Depending on context (e.g. HFT) it might be a wrong assumption.
Re: Ask HN: Anyone making money through algorithmic trading?
#79Yeah I made 21.4% in 2017. I wrote my own algorithms and did back-testing with custom ruby code and data from ycharts.com ($) and brokerage.tradier.com (free if you have an account). Ruby is a weird choice in this area as most probably use r or python, but I love ruby. The key for me is to focus on long-term trading strategies that are at least a year long. The HFT guys and people who spend their time on quantopia an…
In 2017, the S&P 500 was up 18.74% - not that the extra 2.5% you made is nothing, but it's not a get-rich-quick type of return. How many trades did you do over the course of the year? Was your volatility lower than the market overall?
96 trades. 4 active strategies that each buy 2 stocks a month and hold for a year.
I care so little about volatility that I'm not even measuring it yet. And I admit that might be dumb.
Re: Ask HN: Anyone making money through algorithmic trading?
#80I've built "successful" trading statregies. As some comment mentioned, trading on volatility is the key but it's extremely risky.
Everyone is trying to build a successful trading strategy. Honestly, a lot of my peers seem to be making the most from "insider trading" these days.