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Is success random?
Andreas Klostermann
posted
Finance Theory Getting Started

I'm just beginning to explore the Quantopian platform and algorithmic trading in general. I'd like to ask how good are the chances to actually get somewhere? I'm many years away from trading my own money (if I ever), so I'd like to hear how people are doing.

My main concern is that success in algorithmic trading is still random. Yes, it takes skill, but the initial leads and the "hunches" may be sufficiently random to ensure that only a very small part of traders/quants ever are successful, and not necessarily the best.

What are your thoughts on this?

2 responses
Simon Thornington

It's mostly random, but perhaps not completely. That makes for a very addictive hobby, so be warned.

Grant Kiehne

Andreas,

It is all about the risk-reward trade-off and how you define success. If you are considering putting up your own money, you can write your own rules. If you are looking to apply outside capital, you likely won't have so much flexibility (Quantopian purportedly will seek out capital for you, if you have a conforming strategy).

Algorithmic trading is probably like every other field. There are extreme failures, wild successes, and everything in between. So, is it any more "random" than anything else that will result in money flowing into your pockets? It is different, though, in that if you succeed, there is a lot of money that could flow in your direction. Aside from the technical challenge as a hobby, this is the enticement.

Grant

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