Seeking advice on whether trading is appropriate for my situation

T

twosigma

I work as a programmer at an investment bank. I build systems for the credit trading team which receive data from disparate sources, integrates them, and offers analytical views of the data all in real-time.

My strong areas are data management, distributed systems, and functional programming. I'm well-versed in popular algorithms and data structures, and spend about 90 mins each night learning new tech (languages, tools, etc). I also know market microstructure.

I want to start something to generate revenue. Before you roll your eyes, I have no dream of creating a magical trading system which'll flood me with cash. Please read on.

I'm looking at three options for additional revenue:
1) Consult in my areas of expertise. So go out and build data warehouses, business intelligence systems, etc.
2) Build a software product and sell it.
3) Create a semi-automated trading system. Research and test strategies, deploy, and monitor them. This won't be intraday but likely swing.

The primary constraint is that I do not want to leave my job until I'm at least making more in one of these endeavours. I am patient and willing to follow one of these paths for years if that's what it takes. I just don't know which one. They all have their pros and cons.

So the reason why I'm asking this question here is: is option 3 the least likely to succeed even if I'm willing to be very controlled on risk, don't use irresponsible amounts of leverage, and willing to let it take years to reach fruition?
 
Thanks for sharing. This is just one personal opinion. I have just the basic background in coding. I've seen other coders who make great tools and such but had not seen any evidence of retail automated trading working out at least over a month. According to the latest news HFT and automated trading is saturated now with big money algos now having to share smaller pieces of the pie. Maybe automated swing trading could work better but haven't seen or heard of traditional programming concepts such as data structures or algos able to make sense of the markets. Learning to trade manually may be a prequisite before making something automated that truly works.
 
Unless you have deep understanding of Price Action first, crunching the numbers don't work for more than handful of months at best. Most of the programs sold through the years are long term in nature that have lasted more than 1-2 years that I am aware and often have sizeable drawdowns.

I have always advised people that in order to trade without great stress, to continue with their day jobs. Start trading with longer timeframes and build up accounts all the while you continue to backtest. When you get really good at longer duration trading, drop down to swing trading, as time passes, accounts need to grow and your education. It is so much less stress when you have money/health ins coming in that is guaranteed, too many fail cause of the extra stresses. Only when you get really good at swing trading would I advise to go into day trading. But hardly anyone ever listens to do it this way cause lack of funds and patience, people get attracted to fool hardy dreams of grandeur but have so little knowledge of themselves and Price Action.

Good luck.
 
I was interested to read that you sense the credit part of the FI is not too interesting workwise.

The FI data processing is in poor shape, so you are correct that all trading folks do need cleaned up data processing equipment capability.

brokers have poor ways to face traders and the markets use intermediate platforms for taking raw data.

Most platforms have low capacity and little capability to create usable data for making money.

Your three options do not come to grips with the great need that still exists. And your personal money orientation is so simplistic that it is hard for me to see how you could be incentivized by someone to get on with what is really needed.

Most people who are talented and who use platforms to process data recognize that the capacity of a platform is poor. Most people who trade using MAT recognize that brokers haven't gotten off the ground as yet.

As may be seen by reading the SEC's cautions, it is clear that the SEC has no grasp of the present opportunity.

Here is an example to think about.

NFP's depend upon donations and do not manage money in any way. Donations come from those with wealth that is a surplus. These providers are not making money effectively or efficiently either. The organization "Occupy" shows the ignorance of the general population. Wall street still makes money by the use of commissions and fees. Wall Street certainly does not know how markets work.

You may be becoming aware of the opportunity markets have for anyone to make money.

You actually may be aware of how independent and dependent variables work.

Taking money out of the market is has nothing to do with speed of data processing. In terms of computer loops in coding, the market "stands still" compared to the speed of data processing.

123 points out above that learning proceeds from slow to fast market trading. It is pointed out that HFT is here and does not affect making money. A week ago this Friday, the market offered twice the capital required to trade in the first 18 5-minute bars (about 10 years of hedge fund earnings) of that Friday(6SEP13).

How many 90 minute evening sessions would it take you to understand how to take the market's offer using the independent variable information to take the dependent variable offer?

Say, then you spoke about your new found knowledge. Would you be able to build the unavailable bridge between market data and putting money into NFP accounts?

Harvard and MIT, union retirement funds, local governments, foundations, etc., could use a new modus of operation.

Every unused opportunity could be a problem solving opportunity. You seem to want to restrict your money making to working at problem solving doing software packaging. Personally, I just use what is avaiable and forward the money to needy places. A shortcut is needed.
 
lmao.... some people's rambling amaze me...

why dont you look at FX, you can do something similar to what you are doing for your desk...

now, if you work for an IB, you know you cant really do either of the three without getting in trouble.. there are ways to go around it, but I wont get into that in a public thread... feel free to pm me offline..

if you are a good programmer, find a decent fund and move there and increase your bottom line...
 
Quote from ofthomas:

lmao.... some people's rambling amaze me...

why dont you look at FX, you can do something similar to what you are doing for your desk...

now, if you work for an IB, you know you cant really do either of the three without getting in trouble.. there are ways to go around it, but I wont get into that in a public thread... feel free to pm me offline..

if you are a good programmer, find a decent fund and move there and increase your bottom line...
More...

Some people?

There were only 3 people that responded besides you.

When you say some people crack you up, do you mean 2 or 3?
 
Quote from twosigma:

I work as a programmer at an investment bank.
...
I want to start something to generate revenue.
...
More...
Take all the technical mumbo jumbo off you cv. Sadly tech is associated with low cost, replaceable foreign workers, and there is no way around this in today's western world.

Get into any kind of sales job, some role where you sit between the customer and the bank.

This is the only way to be actually valued, as you are seen to generate revenue, even though the seat does most of the work.

You can always use your tech skills again somewhere down the track. No need to be concerned. It's not hard to get back in.

Even if you're the guy who prices and market makes the exotic deriv, you'll still be making your bonus by how much of it you can ram / sell into clients accounts at prices either side of fair.

Everything that matters in finance is selling.

Pm me if you'd like to chat.
 
Ok, the general feedback is that I need to be able to trade profitably manually before considering anything automated. I understand the reasoning. Without the right context, crunching data won't help.

But isn't the scientific method applicable here? My plan was to get historical data and just follow the same process you would with an experiment.

1) Come up with a hypothesis
2) Identify all the variables involved
3) Backtest to see if the hypothesis holds (does x and y cause z?)
4) If it doesn't, start again. And if it does, then ensure there's no curve-fitting and start trading with a small amount of money.

If the signals are generated automatically, then the only manual trading I'm doing is following the system and entering and exiting.
 
only one responded rambled on... "the greatest trader this board has ever met" (according to another thread).... but wait, he will say that all his words were full of wisdom and that I just lacked the intellect to understand them... which btw, I did, I just didnt see how they were relevant to the OP... anyhow, just talking about jack's post.... I placed him on ignore now, that way i dont get distracted with the rambling...

Quote from SteveNYC:

Some people?

There were only 3 people that responded besides you.

When you say some people crack you up, do you mean 2 or 3?
More...
 
Quote from ofthomas:

only one responded rambled on... "the greatest trader this board has ever met" (according to another thread).... but wait, he will say that all his words were full of wisdom and that I just lacked the intellect to understand them... which btw, I did, I just didnt see how they were relevant to the OP... anyhow, just talking about jack's post.... I placed him on ignore now, that way i dont get distracted with the rambling...
More...

They were relevant in that JH was telling OP to look at the bigger picture and observe where the real opportunities were in Wall Street. Which is managing money. Not in trading. Not in working on Wall Street for salary + bonus. Not in owning/operating a brokerage or I-Bank, living off of the nickels and dimes of commissions and fees. Not in delivering another (useless) software product.

But he doesn't think it's a good fit for the OP because his post suggests he lacks an entrepreneurial bent... But he can get around that by working for a salary managing money for non-profits.

To do that, he should pursue option #3, learning to easily make money in the markets with 20-30 days of diligent effort in a proper course of study (if I recall his previous posts) instead of the drivel listed in books, blogs, and forums...

JH wants to be Socrates, but unfortunately, all the students on ET are 3rd graders with severely underdeveloped thinking/emotional/observational abilities...
 
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