
Steven A. Cohen’s Newest Bet: Do-It-Yourself Computer Traders - redcastle
http://www.wsj.com/articles/steven-a-cohens-newest-bet-do-it-yourself-computer-traders-1469592001
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chollida1
> The investment of as much as $250 million will go to a hedge fund launched
> by Boston investment firm Quantopian. That fund provides money to do-it-
> yourself traders who come up with the best computerized investing methods,
> giving a share of any profits to the creators.

This seems like a pretty good idea. A billionaire who runs his own money and
just spent a pile to build out his own quantitative team invests a "small
amount" to see if there is something to the wisdom of the crowds there.

The only point to note is that quantopian has 85,000 people trying 400,000
algos, something about monkeys and Shakespeare seems applicable.

If my experience is any indications the funnel of ideas to profitable
strategies gets very narrow very quickly. Something like for every 100 ideas,
40 get tested, 10 look profitable 5 make it into production and 2 actually
work out. And then you have to factor in that the average life span for each
algo can be measured in months.

Actually that sounds some what depressing:( If you are an algo trader, then
you are always running.

Congratulations to the Quantopian team!! This is a big milestone and something
you should be proud of!

~~~
throwaway1134
> Actually that sounds some what depressing:( If you are an algo trader, then
> you are always running.

This is so true and what eventually made me exit this line of work.

In most other forms of human endeavor, time works in your favor. If you're a
dentist or plumber for example, as time passes, you gain more experience,
build a customer base, can charge more for your accumulated skills, etc. Not
so in algorithmic trading. The things that work well today slowly stop
working, and you have no recourse. Always on the treadmill. I eventually
decided that I didn't want the sustained worry of "what new thing must I
invent today so that I can pay rent next year?"

~~~
vegabook
I buy like 5 books a month just to try to keep up. I've got math-overload not
to mention latency-depression and algo-stress. I have cuda-mares at night.
Trying to keep up is so personally costly that I sometimes wonder if I
shouldn't just become a carpenter. Or a gardener. Bring on the Universal Basic
Income! Free me from this accelerating treadmill to oblivion!

~~~
fapjacks
So it's one job you wouldn't mind the robots come for?

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1024core
General question: if I had an algorithm that could perform well, why would I
hand it over to Quantopian? Isn't a lot of the value derived from the secrecy?

~~~
emptybits
You can use their data and (fast?) order fulfilment to test your algo to the
point where you know it performs well, and then go off and do whatever
wherever you want with it. You wouldn't "hand it over".

From Quantopian's FAQ: [1]

Q: Who owns my algorithms?

A: You own your algorithms. Everything you write is yours. Quantopian does not
own your algorithms; you do.

Q: Are my algorithms secret?

A: Your algorithms are kept secret. We are committed to protecting your
intellectual property and keeping it safe. Ideas are some of the most valuable
assets anyone has. We take this responsibility to our members extremely
seriously

Caveat: In their detailed terms: "If in the course of providing technical
support or other maintenance of the Services it becomes necessary for
Quantopian to view your private Content, such viewing will be restricted to
the very specific technical purpose." [2]

[1] [https://www.quantopian.com/faq](https://www.quantopian.com/faq)

[2]
[https://www.quantopian.com/policies#terms](https://www.quantopian.com/policies#terms)

~~~
harry8
As long as you trust this guy Cohen, oh yeah, the article mentions he's been
done for insider trading. Reputation is as important as assurances given.

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blobbers
This seems like a really exciting development.

I spent a significant chunk of time doing a contest algo but was a bit
hesitant to continue developing on their platform if it was unclear if it had
a future.

This investment asserts that Quantopian is viable going forward and a very
worthwhile investment (of time) for developers.

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akg_67
Where we have seen this before? Visium might be a case study in what can go
wrong with such strategy. Of course some might consider Dan Loeb (Mr Pink on
silicon investor site) as successful product of such strategy too.

[http://www.businessinsider.com/visium-asset-management-
closu...](http://www.businessinsider.com/visium-asset-management-closure-
rocks-wall-street-2016-6)

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swalsh
Sounds like he watched what the Draft Kings guys were doing, and said... jeez
I want to do that on the stock market.

