Is Algo Trading a Realistic Option at Home?

[Jim]

How realistic is it to try and strike out on your own after several years of working at a bank?

Is algorithmic trading only available to the banks that have access to high technology, market makers, etc.?

 

[AlexandreH]

I guess (and I am by no measure an expert) that if you want to do HFT (and anything low latency) you will need the proper technology and home is not really a viable option (although it could be done: get an apart on Wall-street is just the start ). But if you want to have a software running your trading based on strategy/algorithms (without a need for extreme low latency), then it can be done anywhere.

 

[Eugene Krel]

double rnd = random();

if(rnd > 0.5) buy();
else sell();

I can definitely run that at home.

 

[Tsotne]

The only concern is the access to high technology right?! If you can get a machine having a capability to handle thousands of orders at the same time while having calculated the rationale for those actions, then why not?!

 

[figoliuxi]

Yeah, your hardware is the critical factor

 

[Tsotne]

BTW, is C++ the most common language for HTF programs? How about others?

 

[Alejandro Canete]

Hi dddddd,

You have to set aside between 2k and 20k a month (depending on the asset class, broker and number of instruments you are going to trade) for colo and data, you can access and manage your algo from any place you want (your algo is going to run from the colo and thus is going to be at most a couple of milliseconds away from the venues). This of course if you want to actually trade at a very fast pace (directional positions) and holding periods in the order of seconds. If you are thinking about market making or pure latency or book/venue arbitrage, thats a different story, you could still do it from home :P, but the infra needed would cost you, up front, at least 400 k.

Hope this helps,

Bests,

 

[KaiRu]

BTW, is C++ the most common language for HTF programs? How about others?

VHDL.

 

[amanda.jayne]

Regarding infrastructure required, you first need to define how high your high frequency trading is and how your algo's are run - only then can you then determine what data/systems are needed.

It is possible to "intra-day trade" from home with an algo back end and the setup cost need not be exorbitant eg: http://www.lightspeed.com/ - a simple algo can track market technicals, for instance.

The bigger issue is required leverage. If you've been at this for a few years, you should know your daily invested capital 'sweet spot' - for most prop guys I know with a respectable 1040, this number is somewhere around the 500k-1MM mark.

If you're good and have a proven track record, there are plenty of prop shops that would front you the leverage (I know of a few), payouts range from 70-90% and they also provide you with your IT infrastructure.

I've had friends trade succesfully from home - what most tend to miss over time is the social interaction: Hearing what other traders are looking at.