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Need to buy/sell in backtest to recognize paper profits?
michael X
posted Jul 29, 2015
Getting Started Contest Q Meta

Newbie here, basic question:

My in-process algo buys a stock when certain conditions are met. So if I want to hold on to the stock up to and including the current day, how are the performance results calculated?

Does Quantopian assume I sell the stock? Do I only realize paper profits only once the stock has been sold? If the latter is the case, then I should sell it at some point, right?

Second, unrelated question: When I win the contest next month (please suppress your smirk), does Quantopian assume that the algo has to run without any human intervention? I don't think most quant funds work this way: the basic algo runs, but humans are in the loop if significant news or developments impact the outlook for a stock.

1 response
Alisa Deychman
Jul 29, 2015

Welcome to Quantopian! The returns are calculated from the start and end point. It takes a look at the portfolio value at the start and portfolio value at the end, calculating a percentage difference. You don't need to sell a stock to take the profit; if the stock rises in value, then your portfolio value will increase.

All winning algos indeed run without human intervention. The algorithm should run independently, processing market data, interpreting the signals, and chug along.The idea is to make them robust and if you need guidance, take a look at these tips we shared: https://www.quantopian.com/posts/tips-for-writing-robust-algorithms-for-the-hedge-fund

Good luck with your entry - maybe your name will be next on the list :)

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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.