Hi, I am from Computer Science background and I know the basics of Python. But I am weak when it comes to statistics and finance. Where should go to learn the basic things that are needed for me to understand and start building Quantopian algorithms? I already took a glance at the Getting Started section in learn. It was simple and with some research, I understood what was going on but to really write an algorithm, I feel that I need to know about why we need an algorithm and what exactly are we trying to achieve and also all the different strategies we have in finance. I think I am at a beginner's stage and I want to know the resources online that can build my foundation in statistics and trading. Thankyou in advance
Hi Srivatsan, welcome to Quantopian!
You would be surprised at how much individual creativity matters while writing financial algorithms. While it is certainly worthwhile to learn some financial terms, you will find that it isn't always profitable to make trading decisions purely on the traditional value metrics that you might learn at a university.
For example, I have attached a backtest that uses Morningstar's "Value Score" as an alpha factor. Value score is a nice mix of traditional value metrics that is published monthly. As you can see, it got crushed over the past 5 years!
I recommend looking around our forums for inspiration, and agree with Quant Trader that our lectures are a great place to learn as well. One of my personal favorite reads is Thomas Wiecki's machine learning post. Also, try poking around our listing of datasets to find some inspiration.
Also, if you haven't already, read through our tutorial page showing how to write algorithms that meet the contest's criteria.
Lastly, studying what others have done in the past can only take you so far. Try to get creative, find new relationships that no one else thought of, or even provide your own data! You already have what it takes to write good algorithms, you just have to spend some time looking for good alpha factors.
Hope this helps!
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Thank you, the comments are helpful but the main problem i am facing is that i understand what is going on in the algorithm but the thing is i don't get why we are writing the algorithm and the strategy behind it also i don't understand the plot that is being generated. Maybe a good book about the algorithmic trading and statistics might help me. If there is anything else i need to learn, please let me know. Thanks in advance.
If you haven't already, I'd do some real live trading. A good foundation in the basics of buying and selling stocks is the place to start. There's nothing like putting real money on the line to sharpen one's senses and clarify the problems. Even if you don't trade real money most brokers allow you to 'paper trade' which is an excellent second option. 'Why we are writing the algorithm' should come into focus rather quickly after manually trading for awhile. An algorithm is doing no more than automating the trades one would make manually.
Perhaps the first thing you will notice after trading a bit is how stocks go up and down serendipitously with 'the market'. One would think that a 'good' stock would stay rather consistently priced. When trading with real money these 'random' ups and downs get real. Abstract terms like volatility and drawdown start to have a visceral meaning. It becomes obvious what some of the pitfalls are. This base understanding of the issues should then drive you to find solutions. First understand the 'why' then the 'how' should become clearer.
That's my tiny bit of advice. Good luck.
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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.