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Trading one ETF - contest rules question
Leo M
posted Jun 7, 2017
Contest

I am just starting off writing an algorithm. I have a question with respect to contest rules. If I trade just one ETF SPY and my strategy is to get in and out of that ETF will my algorithm be filtered out for not meeting contest rules?

I read in the rules that we need to be hedged (have both long and short positions at all times), If I just go long on SPY at some point (one position in the portfolio) then would I be breaking that hedging rule?

Are there any rules about number of symbols you need to trade? On the one hand I could draw up a list of 20-30 securities from S&P 500 and trade those securities instead of SPY but isn't trading SPY ETF similar to trading a basket of 500 stocks that it represents, so I would be more diversified in theory trading ETF SPY than a bunch of securities that comprise S&P500. Could someone with knowledge of the contest rules please explain whether my algo will get filtered for not meeting some contest rule.

1 response
Dan Dunn
Jun 7, 2017

Hello Leo,

If you're only trading in one name, you definitely won't be hedged, and you won't be able to win the contest. More importantly, you also won't get an allocation, and that's where the rewards get more significant.

I wrote a longer answer to a very similar question last week. I hope that helps explain what we're looking for in the contest and in allocations.

Thanks

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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.