Ask HN: Anyone making money through algorithmic trading?

Post by inputcoffee » Thu, Apr 26, 2018, 12:53 PM UTC

fullstackchris wrote: post #96

inputcoffee wrote: post #28

Earlier quoted context omitted.

I am not sure I understand this. It takes just as much skill to guess if volatility will go up or go down as it does to guess if prices will. The best models we know of (say GARCH) will still pace the information in the option prices.

A key part of how options premiums are priced is the expected, or implied volatility (IV) of the underlying (the stock/future/whatever). Therefore you can be an options seller (selling calls and puts) to get high premium, expecting that before the options expire, the IV of the underlying will decrease, making it more likely you can keep the credit received from selling those high-IV priced options. It can also be his…

Post by 1_player » Thu, Apr 26, 2018, 1:49 PM UTC

simonhughes22 wrote: post #145

headmelted wrote: post #98

I hacked together my own scripted system that would arbitrage cryptocurrency across exchanges. It worked (for the most part), but it's been abandoned now. The best way I can think of to describe why is to say that while the low hanging fruit exists, there's far too little juice in it for it to be worth the squeeze. Others have explained that the problem they've encountered is counter-party risk in that some exchanges…

I spent the last few months trying to build an arbitrage bot and ran into exactly the same issues. If there's a big price differences there's always a reason, either deposits or withdrawals are temporarily offline, or the fee for transferring or depositing is too high, or for some very small coins it can takes ages to transfer (one transfer took 6 hours, another took a whole week!). Otherwise the volume is so low tha…

Post by philipodonnell » Thu, Apr 26, 2018, 2:29 PM UTC

e12e wrote: post #170

philipodonnell wrote: post #166

Earlier quoted context omitted.

"Volatility" in the term "Volatility Trading" does not mean the stock's movements, it is a way of measuring the excess value in an option beyond what the parameters of the option would imply. That excess value is usually referred to as the market's assumption about the future volatility of the stock, but really its just an error term influenced by market participants based on supply and demand. Low volatility means "…

So it's "buy low, sell high" - but for options, not stocks? [ed: that's to say, you need a way to get more/accurate pricing information than reflected in the market - but for options, not assets]

Post by the_cat_kittles » Thu, Apr 26, 2018, 2:58 PM UTC

harry8 wrote: post #217

the_cat_kittles wrote: post #21

wouldnt you rather do something to earn money?

Tightening the spread reduces everyone's transaction costs. Successful algo trading takes money away from existing market making traders and splits that money with those who need to trade for reasons of capital allocation, financing and hedging. It's straight up price comeptitive under cutting in the most darwinian way possible. Less money sticks to the financial system, more money in the hands of business to expand…

Post by theptip » Thu, Apr 26, 2018, 4:21 PM UTC

vinhboy wrote: post #29

jmhyer123 wrote: post #4

Yes. I've developed a simple strategy that algorithmically trades cryptocurrencies (mainly ETH and BTC because volume, but it would apply successfully to any of the others as well). The strategies are simple, they are based on simple technical indicators, and result in about 2 trades executed per day. The strategy can be applied to "normal" equities as well but it performs particularly well on cryptocurrencies due to…

I have a strategy I wanted to try. Look at historical percentage difference between currencies. See if there is any patterns like, every time BTC drop 10%, LTC drop 20%, or something like that... Find those patterns and trade on them. Do you know if people are doing this?