Here are my caveats:
1) low capacity strategies are the only ones that have a high enough profit/loss ratios but haven't been completely consumed by the hedge funds.
2) Because they are low capacity strategies, you can forget about compounding. Be happy with consistent cash flow.
3) Because they are low capacity, you can only feasibly scale across more products, not with bigger bets. This means that at some point, your connection bandwidth will become a bottleneck, even after you have graduated to professional data brokers. That then translates to a parallelization engineering problem. For me, it never made sense to deal with that complexity. It was better for me to have suboptimal earnings than to try to horizontally scale heterogeneously-active trading systems across servers in a data center.
Once you take into account the caveats, you can make a tech-industry level salary on your own with a lot of work. For some, the freedom may be worth it. For me it was, up until it wasn't.
It seems to me one of the bigger risk factors is attempting to maximize profit. If you're ok not trying to maximize profit it seems to me that you can mitigate quite a bit of risk in the short term trading.
" You have a choice: $103k or your pride. To keep the $103k, you'll have to swallow your pride and admit it was all luck. If you choose your pride, you'll go to $0. The choice is yours. Best "
Insane returns is one way to get to financial independence, because even if the edge exists, it's going to eventually disappear. You can boast about financial independence once you make enough to live the rest of your life from safe passive yield, after inflation, which in the current very low real rates environment requires a lot - maybe $3M as the bare minimum.
renaissance tech. has been doing it for 3 decades and with vasty more capital. maybe it is skill, too.
Check out something like FIRE calc: https://firecalc.com/
What you need to do is figure out the burn rate to sustain your family, figure out your safe withdrawal rate (e.g. 3.5%), then you can easily get amount of capital required.
A Mormon friend of mine, with 5 kids, spends less on food for his family than we do (family of 4) --he/his wife are just much better at spending on it. There are also factors like, it's possible to get a 3-4K sqft house for a very reasonable price & low taxes, vs. living in a tiny box in San Fransisco for 2x more.
Funny how so many people are skeptical, as if they they want to be convinced that it's not possible. The fact Renaissance Technologies has been so successful for so long shows it can be done. Easy? no, but possible, yes.
I've been in this industry for a while and folks making high returns solo either:
1) Got lucky for a very short amount of time, then their strategy stopped working. On avg those folks net lose money trying to make "the thing" work again.
2) Were running a super risky levareged strategy and went bust eventually
What about prop funds, which are trading for their own account? Seems like those wouldn’t keep it up very long if they were losing tons of money.
"this algo is levered far higher than it ought to be and while you've dodged landmines this month, you won't in the long run,"
vs.
"your 'minimum viable stat arb' and competent implementation outperforms the best-of-the-best outlier."
I think skepticism is warranted as most people at this point end up blowing up, but hey, I guess there's some slim possibility that it's the latter?
The Medallion Fund is also larger than a single quant's trading portfolio. This is important because a given trading strategy loses its effectiveness (in percentage terms) when scaled up. A strategy that yields 100% return on a 10k investment is unlikely to return 100% on a $10M investment, for instance.
I did originally buy into the explanation that they collected/digitized stock data that is no longer available.
But really it’s more likely to be some sort of fraud.
We measure momentum and use that to identify stocks with a good chance of massive price movement. It's currently free over at Twitter but will cost $8.99 per month.
Currently targeting people who know how to invest but long term goals are, of course, giving alerts to buying/selling opportunities and eventually investing on peoples behalf.
Historically the average stock has increased by 7.64% per day but given improvements to the algorithm we've managed 18.88% per stock this month. Though that does drop to 12.2% if you remove the 519% that COSM achieved.
All historical stocks are shown on homepage, with leaderboard at https://feetr.io/leaderboard (cuts the noise and gets to the exciting stocks)
I know it's advertising and just about everyone reading the post should see it as such. That's not uncommon here.
