Ask HN: is algorithmic or HF trading something I could do on my own? Assuming I had the necessary skills (and I do, in math and programming, but not finance or trading at the moment), could I do algorithmic or high-frequency trading on my own, or is it (participation in the market, low-latency information, etc.) priced too high for an individual? |
You'll typically need to buy a server and colocate it at your broker's datacenter.
Brokers to talk to:
http://www.limebrokerage.com/offerings/by_role_highfrequency... (This is the same Lime as LimeWire.)
http://www.interactivebrokers.com/ibg/main.php
Unless you are very rich, you probably can't afford to do latency arbitrage, which is only a subset of high frequency. The capital expenses (custom routers and the like) are probably too high for individuals.
It is a very capital intensive business.
You need a large amount of capital to get started (single millions? maybe up to 10 million?)
You have a high barrier to entry: colocation at exchanges (expensive), expensive data feeds, sophisticated event-processing software...etc
Then after you have all that you need the brokerage relationships.
Then you need to actually develop a successful algorithm - and your competitors have many years more experience than you.
...etc...etc
You get the point.
However, you could look at automated technical analysis / to supplement your own retail trading, but HFT is its own game.
Are you speaking from personal experience by the way?
I developed an algorithmic trading program for fun once. I never let it loose on a real account, but it did better than break-even on a few months of data I collected.
BUT: the trading costs killed its viability (even using interactivebrokers), unless I upped the capital I was using to an amount that I wasn't comfortable risking.
There's a useful forum at http://www.elitetrader.com/vb/forumdisplay.php?s=4a039395d01...
Personally, I think you have less of a chance in making HF work for you than other methods though.