Our target is to pay you 10% of the net profit on your algorithm's allocation.
This is quote from https://www.quantopian.com/allocation
Got my attention because of the construct. It says "our target is to" not "we will" pay you. Wondering if you could explain what could potentially impact your ability to pay?
Also can you define what constitutes net profit - how is it calculated?
Hi vladimir,
Thanks for your interest and question.
With respect to the definition of net profits, we calculate it as part of the author agreement by summing trading gains and losses, and subtracting out typical costs such as trading commissions and borrowing costs.
In terms of the language around "our target", we need to account for the possibility that our agreements with authors might need to change in the future for a whole host of reasons that I can't outline here. Therefore we don't want to have language in our public marketing that guarantees the split. That said, all of our agreements with authors are 10% today.
Thanks
Josh
The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by Quantopian. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as none of Quantopian nor any of its affiliates is undertaking to provide investment advice, act as an adviser to any plan or entity subject to the Employee Retirement Income Security Act of 1974, as amended, individual retirement account or individual retirement annuity, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement or other investor, contact your financial advisor or other fiduciary unrelated to Quantopian about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal. Quantopian makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances.
Thanks Josh. Do selected authors have any product features that are not available to rest of users? Can you explain how they track performance of their algorithms?
Hi Josh -
My understanding is that Q decides and manages the gross leverage for a given algo and the net profits shared with the author are on the leveraged trading. Correct?
Obviously, leverage can play a big role in the profits to authors. For a given algo, is the minimum gross leverage something in the contract? Or is it controlled at-will by Q (which would be reasonable, but it would be nice to know this detail).
The other question is how, upon combining the alphas from a basket of algos, you will do returns attribution? Each algo is a signal stream of tickers and weights, so when you combine them, you need to back out the contribution of individual algos, after another round of alpha combination and portfolio construction, which would seem to make a jumble of things. There will be an overall net profit, but you then need to figure out how much of it to dole out to each author. What's the game plan?
The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by Quantopian.
In addition, the material offers no opinion with respect to the suitability of any security or specific investment. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as none of Quantopian nor any of its affiliates is undertaking to provide investment advice, act as an adviser to any plan or entity subject to the Employee Retirement Income Security Act of 1974, as amended, individual retirement account or individual retirement annuity, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement or other investor, contact your financial advisor or other fiduciary unrelated to Quantopian about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal. Quantopian makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances.
