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Is behaviour economics another secret to really make it big in quant??

(Last Updated On: May 17, 2010)

Here is a conversation on reddit.com which pretty well inspired me tostart thinking about blending my knowledge of technology and financial investment. This was pretty inspiring where an indie software engineer launched his own business. He is now clearing in the millions per year. Source was:

IAMA 100% automated independent retail trader. I trade around 800k to 1.5 million shares a day and make 2cents/trade on average. AMAA from IAmA

whatswith_this 1 point2 points3 points 6 months ago[+] (3 children)

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bolln 1 point2 points3 points 6 months ago[+] (1 child)

bolln 1 point2 points3 points 6 months ago[-]

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What’s your stance on the random walk theory and efficient markets?

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mejalx [S] 6 points7 points8 points 6 months ago[+] (0 children)

mejalx [S] 6 points7 points8 points 6 months ago[-]

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I’m in the boat with the behavioral economists.

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AnonysaurusRex 1 point2 points3 points 6 months ago* [+] (3 children)

AnonysaurusRex 1 point2 points3 points 6 months ago* [-]

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So by my calculations, and correct me if I am wrong, but your software earns you around $7M per year – nice.

A few questions:

  1. Is there much upkeep required?
  2. Do you often change or adapt algorithms based on current market situation or are these adaptations built into the algorithms
  3. What was your starting capital?
  4. To start – how did you overcome the brokerage fees? I am very interested in this field, but find that $20 per trade makes it extremely hard to not loose money – especially when trading quickly.

Thanks for posting this IAMA 🙂

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dungar 1 point2 points3 points 6 months ago[+] (1 child)

dungar 1 point2 points3 points 6 months ago[-]

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have you tried carbon trading? how can one become a carbon trader?

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mejalx [S] 2 points3 points4 points 6 months ago* [+] (0 children)

mejalx [S] 2 points3 points4 points 6 months ago* [-]

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No. If you want to get into that business it’s best to go work for an institutional energy trading company. Houston, TX would be the place to be.

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neuroadvice 1 point2 points3 points 6 months ago* [+] (7 children)

neuroadvice 1 point2 points3 points 6 months ago* [-]

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  1. Any insight into why more people are not doing this? It seems that any software engineer, if they worked hard enough, could do this.
  2. Does your system automatically find stocks and buy and sell them based on variables? What things are automatic about it?
  3. Are you constantly tweaking your models or focusing more on making new ones?
  4. What markets do you trade in? Dow Jones? Nasdaq? International? Forex? Other?
  5. What are some of the biggest mistakes you have made and what have you learned from them?
  6. How far do you think you can go? Since you will be increasing the amount of money you can invest each year, do you see yourself making tens of millions a year in 5-10 years? What are the bottlenecks that are stopping you from making more money right now?

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mejalx [S] 2 points3 points4 points 6 months ago[+] (6 children)

mejalx [S] 2 points3 points4 points 6 months ago[-]

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  1. The knowledge barrier has to be overcome. When you want to learn a new programming language, you can buy a book or a course. If you want to become a doctor, you go to medical school. In finance/trading, you can’t get access to education, but you still pay tuition. Most don’t make it out of the learning stage. You need discipline and motivation, capital, and a lot of time. If it were that easy, everyone would already be doing it.
  2. Everything is automated. I tune parameters for the gray box systems, and I will choose when to activate/deactivate system as part of my portfolio.
  3. Both.
  4. I trade US equities/options and US futures/options (SIFs, currencies). I’ve been looking to expand into trading UK equities.
  5. My biggest mistake in the past has been relying too heavily on models. Models are only simple real world abstractions and my common sense has saved my neck more than once.
  6. I’m flirting with the idea of starting a small proprietary firm. It would be nice to have a staff of programmers, so I could focus on the other aspects. I’m mostly limited by time. I’m not happy with the clumsiness of my infrastructure, so I want to get things up to par before I start handling drastically more money.

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orijing 1 point2 points3 points 6 months ago* [+] (1 child)

orijing 1 point2 points3 points 6 months ago* [-]

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  1. Doesn’t it just take a few genius quants to trade the market? What I’m asking is, it doesn’t take a million of them to squeeze out all excess profits–so why is 10000 or however many there are too low?

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mejalx [S] 1 point2 points3 points 6 months ago[+] (0 children)

mejalx [S] 1 point2 points3 points 6 months ago[-]

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Someone still has to do all the leg work. The bigger you get, the more restrictions you’re put under.

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citricsquid 1 point2 points3 points 6 months ago[+] (3 children)

citricsquid 1 point2 points3 points 6 months ago[-]

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!

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