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Ask HN: Anyone making money through algorithmic trading?

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191–200 of 254 posts

Re: Ask HN: Anyone making money through algorithmic trading?

#191
Yes. I "algo" trade equity options. It's strange to me that I don't see much mention of this answer given all the argument about stocks being a 50-50 bet.

Options let you just roll the dice on probabilities off the assumption that the market is effectively random. You can use them to push the 50-50 probability much further in your favor.

For example, I stand to profit nicely at the next expiration (May) of most of my options as long as the market doesn't move more than a stddev in either direction. It could go up, down, sideways, no matter. I will make money. If it drops significantly, I will lose marginally until my "insurance" (far OTM puts) kick in and I start marking money again.

Edit: A common beginner's option strategy is to write a put for a stock you'd like to own. If the stock stays flat or goes up, you make money off the premium. If it goes down, you now own that stock. You can now turn around and sell calls against that stock, collecting premium until you're forced to sell the stock because it's moved back up again. You only "lose" if the stock makes an extremely large move down (like going bankrupt, or a GE style dividend) and you're stuck with a stock you can't sell premium against. Far from the 50-50 bet most people think of when they think of stocks.

Re: Ask HN: Anyone making money through algorithmic trading?

#192

I use neural networks to try to predict sports betting outcomes. In financial markets, I badly wished there was a way to bet/lay a public company's metrics. (eg. next month's sales figures)... That would be heaven.

i have a huge database of historical data pm me

Re: Ask HN: Anyone making money through algorithmic trading?

#193
I'm going to pull out some small bits from your AHN and ask in return: If you think you might have found a niche that might work in your favour, why on earth broadcast it?

"...that would not be interesting enough for larger algorithmic trading firms"

This could have been your potentially unique insight.

"... But are there opportunities ..."

There probably are but you wont find them being researched on AHN.

"no need to disclose _how_ you actually do it"

So, you don't think it is original anyway.

Before you went AHN, you had an idea but instead of doing some original research on it, you dived straight in and published it here. No doubt you will (have already) get lots of ideas and responses but the idea is out there now whether you want it to be or not.

Re: Ask HN: Anyone making money through algorithmic trading?

#194

I'm going to pull out some small bits from your AHN and ask in return: If you think you might have found a niche that might work in your favour, why on earth broadcast it? "...that would not be interesting enough for larger algorithmic trading firms" This could have been your potentially unique insight. "... But are there opportunities ..." There probably are but you wont find them being researched on AHN. "no need t…

Honestly, I don't. I was merely wondering whether people are even able to make money doing this.

This is akin to, "are indie devs making money on the App Store in 2018?"

Re: Ask HN: Anyone making money through algorithmic trading?

#195

Yes. I "algo" trade equity options. It's strange to me that I don't see much mention of this answer given all the argument about stocks being a 50-50 bet. Options let you just roll the dice on probabilities off the assumption that the market is effectively random. You can use them to push the 50-50 probability much further in your favor. For example, I stand to profit nicely at the next expiration (May) of most of my…

I guess my question about what you've described is: can't I just give you my money, you do this for me with my money, and you make a cut off of it?

In other words, what products can I buy that basically do what you're doing already?

Re: Ask HN: Anyone making money through algorithmic trading?

#196

Yes. I "algo" trade equity options. It's strange to me that I don't see much mention of this answer given all the argument about stocks being a 50-50 bet. Options let you just roll the dice on probabilities off the assumption that the market is effectively random. You can use them to push the 50-50 probability much further in your favor. For example, I stand to profit nicely at the next expiration (May) of most of my…

I guess my question about what you've described is: can't I just give you my money, you do this for me with my money, and you make a cut off of it? In other words, what products can I buy that basically do what you're doing already?

Not me, no. But if you've got a good money manager they can/will do this sort of thing if you ask. Otherwise, this is sort of how a hedge fund works--delta neutral portfolio management. You can always try to join one of those.

Re: Ask HN: Anyone making money through algorithmic trading?

#197
post #149

Earlier quoted context omitted.

Trading volatility might imply that he's buying options in both directions. Big moves either up or down would be profitable. The only unprofitable move here would be no substantial moves in either direction. (In which case you lose your entire bet, but no more.)

Could you expand on how that would work? If X is priced at 10 units of currency, and I promise to buy 1 X for 11, and to sell 1 X for 9. And X stays available for 10, I end up paying 11, receiving 9 - netting a loss of 2. If I manage to promise a sell/buy at 10, I even out. What do I lose with low volatility? And how do I make money "both ways"? Clearly I lack a basic understanding of the concepts involved.

Khan describes the long straddle (3:53): https://youtu.be/2HIRaOQDRho

Re: Ask HN: Anyone making money through algorithmic trading?

#198

I have an equities strategy that I run on IB. I think it is possible to generate alpha with a small account if you do it right e.g. don't compete with big funds in HFT. There's a cool article about this by Robert Carver who used to be a portfolio manager at one of the top quant funds. https://qoppac.blogspot.co.uk/2015/11/david-versus-goliath.h...

do you think IB would close an account for algo trading? I have bad experience with sportsbooks

Re: Ask HN: Anyone making money through algorithmic trading?

#199

Earlier quoted context omitted.

Why does a programming language matter in terms of algorithms? Can you elaborate on that?

Because big money will trade enough dollar value as to change the price by their action so whoever is second missed the opportunity. Languages like python are immediately out, they make no attempt to be fast (which is fine for their niche). Even languages like Java are out, the JVM is too smart: it turns out that the algorithm needs to analyse a few thousand possible trades where the answer no trade before it gets on…

this blew my mind :)

Re: Ask HN: Anyone making money through algorithmic trading?

#200
post #72

I 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…

> less than half of their forex traders are profitable

Slightly less than half are profitable. This seams reasonable. And how much of IB trades are done by algo trading? Probably not much.

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