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Show HN: Algorithmic trading for everyone (justfor.fund)
122 points by Unknomad on April 22, 2022 | hide | past | favorite | 75 comments
Hi there. I built a company that makes algorithmic trading strategies for its users to invest with. --> https://justfor.fund

Advice and feedback are very much welcomed!

Disclaimer: New born business with its first beta version (12 users) currently live.

Details:

- I'm the sole developer and founder

- I applied to YC S22 batch on the last day

- Currently facing a big KYC compliance wall (code and protocols)

- My priority right now is obtaining funds to cover minimal operational cost's. Need to pay for broker partnership costs too.

- I have essentially no funds to cover cost's right now.

- Currently applying for dev positions on several companies.

- Developed the beta version on 3.5 months full-time.

Thank you




1. Takes months/years to develop a profitable trading strategy with a team of people. 3.5/mo on multiple algorithms is kinda laughable.

2. The adverse selection here is really really high: if you could generate alpha, you would find some capital from a big multi-manager or allocator (which is incredibly easy to get these days), and just focus on running their money. The fact that you are making a retail focused site instead of raising private capital says a lot.

3. Looking over the trading algorithms, seems pretty clear that you don't have a background at a prop firm or a quant hedge fund? It takes years to learn this stuff, and the only way you can reasonably do it before going out on your own is at an established shop.

Sorry to be a little harsh, but something like this is never going to work and no one in their right mind should allow your algorithms to trade for them. Generating alpha is incredibly incredibly hard, and teams of experts often spend years working on it with nothing to show for it.


1. You gotta start somewhere. Keep laughing at noobs though.

2. It says this person is new, and doesn’t have connections or inroads to get capital from “a big multi-manager”.

3. Sounds about right, but I disagree that the only way to go out on your own is by starting at an established shop. That doesn’t pass the sniff test.

Very likely won’t make a profit. Sure. Will it get him a job offer, connections, or experience. Absolutely.


Noobs deserve to be laughed at when they start taking capital from retail investors.


FYI. Not taking any investment's for the time being. I want to help people. Not harm


Agreed very much. Especially in crypto you see a lot of (more than luck) success with quants/traders with no prior trading experience.


You do? Where? I can name all the most profitable shops and every single one of them is staffed by ex tradfi prop shop guys.

edit: actually no, I can think of a couple counter-examples of successful firms started by people with no professional trading background, but it's exceedingly rare.

PS: My original comment came off as exceedingly harsh and am sorry for that. OP if you read this mb, just got kind of triggered for a moment. However I will say the design of your site is really slick!


You don't have to consistently generate alpha to make bucks as a small time trader. Even a simple strategy like buying dogecoin everytime elon tweeted about it was a sureshot way to makr money in the crypto market


Plus, the whole basket of assets going consistently up over time doesn't hurt.


Thank you for your feedback. It's a work in progress. Being the only developer, an engineering student and a part-time freelance dev at the same time, it's hard to keep up with the maintenance of the algorithms and keeping the platform working perfectly. 3.5 months was the time i developed full-time. Some of the algorithms have been running since aug 2020


Don't let these people discourage you. You are starting up and by the fact that you already got people's attention in HN, that shows that you are onto something greater. Keep the good work!


Really appreciate your comment!!. I am too much of a dreamer (curse or not) and i've dedicated too many hours (3000 aprox) for these comments to discourage me. I love facing criticisms and building from them :)

Cheers!!


Also. I don't think that generating alpha is necessarily the only motivation behind building an investment strategy. There are endless possibilities of financial products that could be built on top of a platform like this.

Basically, im looking for help to build the best possible platform.


1. "it takes months/years....but taking months is laughable" -?????

2. You could say this about any startup in YC. "If XXXXX then YYYY would do it".

3. Again, you could say this about any startup founder.

Seriously


Wrt number 3 it is really is like walking into a knife fight with a spoon. It may be of note that a lot of financial practitioners consider themselves experts in markets, not trading. This is partly modesty, and partly an acknowledgement that there is a mountain of either bullshit or financial genius (e.g. the moment you have an option for sale you can suddenly turn apparently disconnected numbers into a correct price) to deal with.


How does one generate alpha?


Just an FYI, there is a company that spent 5+ years building a no-code algo trading platform and it's pretty slick: https://optionalpha.com/ Of course, competition is always good for innovation though. It looks like they are integrating with brokers to avoid the KYC issues (however, there is certainly a lot of liability in automatically placing orders though). You will still need to get live market data from somewhere but the compliance for that isn't quite as crazy.


That company looks great! Thanks for the info and the advice


Sorry to pile on, but this doesn't look great. Most people with any quantitative finance experience will tell you this is the wrong approach / the wrong application of these types of techniques. ML in trading is primarily used for portfolio optimization and relative value-type analysis. It (and especially Reinforcement Learning) are not useful if you a just trying to build signals to trade with. And Fibonacci Retracements are only kinda useful as a visual tool for assets that are mean-reverting in some capacity (i.e. forex). It is applicable to Crypto to an extent, but the volatility of Crypto nullifies most of the usefulness as this as an actual trading signal.

If you really want to pursue this, it would be helpful if you provided a bit of info on how the strategies worked, what type of hedging / risk management is going on, etc.

Best of luck


Hi! the vision is different as the products are shown right now. Because i lack expertise, of course an experienced quant would laugh at my basic algorithms. But i had to start from somewhere. My aim and the features i want to implement now, will mainly come from fast product iteration, making connections with people that do have much more experience than me and quality growth for the algorithms.

"Attitude is a little thing that makes a big difference" Winston Churchill.

Give it some time haha!

Cheers


Well, you tried something, next time try to make something that can't lose ordinary people money unexpectedly. A few notes:

- The links didn't work in my mobile browser.

- What I've seen similar platforms do is let users create strategies and then let other users invest in those, for a share of the profits.

- Are you actually accepting investments already?? I hope that's just your family, but you might be in deeper legal trouble than you realize. Take that feature out asap until you talked to a specialized lawyer.

- If you get a job offer, I'd take it if I were you. And take down the site, and pay out the investors (in full or above that; I'd cover any losses by the algorithms out of my own pocket).


Thank you for your feedback! Of course! My main aim is to help people. Always. Currently i'm not accepting deposit's. No chance of taking down the site though :)


One potential target audience might be employees / executives of publicly traded companies. If Alice owns stock in her employer or her employers' partners / suppliers / clients, she may be very interested in an algorithmic position manager to help her achieve her financial goals (e.g. selling down if the position exceeds a certain percentage of her net worth).

The main reason Alice would like this is to create an audit trail that defends her against any hypothetical insider trading accusations. That is, your brokerage will have records that explain not only what trades occurred (as any brokerage will do), but also why those trades occurred (you ran algorithm F on X input and F(X) is what popped out).


Next step: bespoke algorithms with neural nets trained just so to produce the result you want. “We’re about to close this deal, run the algorithm that decides to buy $vendor stock”


Setting an algorithm loose on the stocks that you own in your employer is not a great look from a compliance perspective at all. And if you give it specific instructions like try to sell down my holdings optimally, that doesn't relieve you of insider trading allegations at all. If you want to sell, follow the appropriate compliance procedure, then you're free to do so in whichever way you like.


That might not be sufficient.

First, some publicly traded companies have freezes and employees can only trade in specific windows. The algorithm will need to take this into account.

Second, is "an algorithm did so" a legitimate defense ? It will probably depend on the jurisdiction but i can imagine lots of courts dismissing that because regardless of algorithms, it's on the human not to act illegally, and humans have created, tuned and parametered said algo. I don't think laws have been updated for such cases ( like with self-driving cars).


This doesn’t work if you have the ability to let good trades proceed but cancel bad trades after having learned nonpublic info. You’d have to commit to a https://www.investopedia.com/terms/r/rule-10b5-1.asp plan during an open trading window, and I don’t know how complex the price/quantity formula is allowed to be.


This blew my mind. You genius lol. Lets talk. matias.mingo@gmail.com


Page does not load

"Application error

An error occurred in the application and your page could not be served. If you are the application owner, check your logs for details. You can do this from the Heroku CLI with the command heroku logs --tail "


Trying to fix it. Getting too many requests :)


HN Hugz... :-D


[flagged]


> Some solicited advice

I'm pretty sure that's not what "solicited" means.


> Be careful with Heroku DMCA takedown if you don’t plan on open sourcing the project. G

what does this mean, and how would open sourcing help, and what is the G?


I don't understand.


Site down -- Love the idea and been waiting for something like this. I want a yahoo pipes (if anyone even remembers that) for algo trading. I'll wait and see if that's what this is when your app is up!


My company offers exactly this kind of product. We’re currently offering it to institutional investors, but if you’re interested, would love to talk and discuss your use case. My email is my username at alum dot MIT dot edu.


My app does something like that, only for crypto right now (also waiting to see this app too). https://tradecast.one


Thank you! The website is up an running now


I hope the growing interest (probably driven also from the crazy $$$ that prop shops are paying) in algo-trading will lower the barrier of entry.

Another interesting platform which grows on similar concepts is Composer: https://www.composer.trade

A big missing piece in OP's project is a backtesting - I think that a very important part of testing your strategy is trying it on real-world data.


Great idea, I wish for you to succeed with that and do not be discouraged by negative comments here. If you love what you do, keep doing it, eventually you will figure out the missing pieces. Take a look if you still didn't at open source trading bots like Gekko. And add a email subscription service, I would love to be notified about news and product updates. Good luck!


Thank you very much for your feedback!! Really means a whole lot.

Kindly, Matías


Any time I see ML claims, I want to see rigorous validation. At the end of the day, whether or not your approach works isn’t debatable. It’s measurable. My prior is that everyone is full of shit, because most ML claims are.


Hi! Just want to say im a passionate inventor and programmer. I just love and have fun learning new technologies and building my dreams with them. I'm no expert on ML but i could tell you that i have a bunch of personal ML projects ranging from Deep-Reinforcement-Q-Learning to NLP and computer vision. I have been programming for aprox 8 years, 5 of those during my engineering and computer science BS studies here in Chile.

Check some of my ML projects here!: https://github.com/MatiasMingo/Machine-Learning-Projects

Cheers!


Nice font!

> Currently facing a big KYC compliance wall (code and protocols)

.. but yes, you're going to learn a _lot_ about the difficulties of legitimately marketing to retail investors.


Why are you doing KYC?

Yes - you're doing KYC because you're holding your customer's money.

Don't do that. Instead, figure out a way to provide trading services using your customer's accounts at existing exchanges (or DAOs). Let the exchanges do KYC.

In other words, be a tout, not a bookie.


Yes! That's a brilliant idea. I'm going to figure it out. Thank you that is very helpful!


Note that you don't need partnerships with exchanges to do this. You just need API documentation.

You're just providing software and possibly running (that is, arranging to run said software on some cloud service) software for people.

Also, you might want to look at hummingbot.io .

One of their models is aggregating market-makers.

Exchanges and some coin promoters pay rebates to large market-makers.

If you use hummingbot to do market-making, they'll include you in their pool (which consists of lots of small market-makers that the exchanges and promoters won't deal with individually) and give you a proportional share of the rebates that the pool earns.

Yes, that aggregation does involve dealing with exchanges, but maybe you can come up with an angle that doesn't. Or, maybe that's an easy relationship to arrange.

See https://hummingbot.io/en/blog/2022-02-liquidity-mining-march... for some recent numbers. (Liquidity mining is what they call being paid to do market-making.)


How would you compare yourself with Quantopian? https://en.wikipedia.org/wiki/Quantopian


I think my business is simpler and more permeable than Quantopian for the regular retail investor. Also, Quantopian let algorithmic trading dev's publish their algo's for a percentage of the income in return. I would love to include such a feature in the near future but for now it's just too risky for me to let anyone publish an algorithm without the correct KYC. Also i think Quantopian's business model, however complex and well thought, was flawed.


Apologies as this is not directly related to the post - what books/other resources would you recommend for someone who wants to get into algorithmic trading?


Ernie Chan's books are a great starting point. If you plan on getting into the ML side of things then Stefan Jansen and Marcos De Prado's books are a must have.

Some advice: Read lots of books, stay away from Reddit, be prepared to get lamented by other algo traders, expect every idea you read about to have lost all it's alpha, get ready for several misguided "I've done it, I'm rich" moments, and most of all have fun. It's a long and arduous journey with very little hope, but if you like impossible challenges then there's nothing quite like it.


I would recommend creating one from your own intuition. That's an awesome practice i think. You would be amazed on how simple they can be.

Also some books i would recommend are: - Hands on Machine Learning for Algorithmic Trading, Stefan Jansen, Packt - Python for Finance Cookbook, Eryk Lewinson, Packt

Cheers!


Not OP can check out algotrades subreddit perhaps


Unit can cover your compliance and KYC responsibilities. Just learned about them. Will get you there significantly faster and cheaper too.


Awesome! Thank you


> Currently applying for dev positions on several companies.

Is there a way to contact you regarding this - specifically Algo trading software related?


Hi! My email is matias.mingo@gmail.com


You definitely have a good domain. Best of luck!


Thank you all for your replies! You are awesome and extremely helpful.

Site is currently up. Having some unexpected issues with traffic.

Sincerely, Matías


Since your site is down - and if this is open source, can you share a link to the source code?


Currently not open source. The site is up though!

Kindly, Matías


i don’t think you can simply let people invest in strategies you manage. that stuff is highly regulated and i think you will have to become a broker?


Hi! So yeah, i need to register as an RFA to operate legally with stocks. Not crypto though (Depends on the country).

Cheers!


Cannot enter the site. Showing heroku error


Website is incredibly laggy


Was this app born in Chile?


Yes!!


so did you get into YC?


Not yet!


isn't algorithmic trading essentially about leeching from others. i wouldn't call it investing.


No, algorithmic trading is not about leeching from anyone in any intrinsic way. Like all trading there are good and bad actors, and bad actors get a lot of press.

The two biggest roles that “algorithmic” or “high-frequency” or “electronic” traders play are:

- market making: someone has to warehouse a bunch of thing A a and thing B so that buyers or sellers can find a counter party. this used to be an Italian guy from Jersey called a “specialist” and he quoted in eighths so that the minimum he could make per unit was $0.125. he was not giving you a better deal than optiver.

- arbitrage: thing X costs a lot in Chicago and is cheap in New York, or vice versa. buy in the cheap place, raising the price, sell in the expensive place, lowering the price. wash/rinse/repeat: shit costs the same in both places now. people have been doing this since before the wheel, on foot.


Neither of those describes sub-millisecond, programmed trading.

It is, instead, simply gambling. Like poker, it is not really a game of chance, so those with better algorithms and faster hardware win, but it provides society absolutely nothing of value. Generally it amounts to leeching off of other traders who might be providing something of value.

It has got so many have custom electronics connected directly to the fiber that delivers market event reports, and trigger sending an order even before such a packet finishes arriving, the response calculated in an FPGA in under 100 nanoseconds. Nowadays those traders have equipment in cages in the same building as the exchange, and the fibers to all the cages are exactly the same length.

They may have a collection of order packets already formatted, and just pick one of them to send according to the update.

For a while some would trigger sending an order early, and then add a bad checksum if calculation indicated it was not right. The exchanges banned that, not because it was unfair, but because it added load not paid for.

A way to preserve value for the non-gamblers would be to place a (proportionally) small tax on trades, so whoever does it most frequently pays most.


How are market makers using algo trading to warehouse a bunch of stock?


The use of models and algorithms is in an effort to not get caught on the wrong side of a big move, the technical term for this is adverse selection, more colloquially “getting lifted”. If someone is coming through with a massive order and you fail to anticipate this and cancel in time, you’ve effectively subsidized a block trader. Market makers want to participate on both sides picking up a small fee (typically one tick) for providing liquidity in a market that is seeing price action in both directions. They don’t want to get run over by agency execution people trying to lay off 21 billion in Tesla stock.

The common misconception is that in order to sell you a share of AAPL, the market maker first buys it cheaper and then sells it to you in some unfair way. There isn’t time for that: they already had inventory.


they already had inventory.

Lots of wiggle room in that "had inventory" definition as well.


The person on the other end of the trade doesn't have to take your offer. In fact, you are doing them a favor by providing liquidity.




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