Trading: a hacker approach?

Trading: a hacker approach?(hyperq.github.io)

4 points by zygomega 13 years ago | 8 comments

VandyILL 13 years ago |

I don't think that building slightly faster software and hardware to run other people's algorithms is really hacking financial trading.

To me, if you wanted to hack the system, you would look at creative approaches to make the market behave in ways that it is not supposed to.

An example that I'm working on is the idea of an alternate currency where the deposits are invested in socially responsible / clean energy companies etc. People would trade their currency via NFC wallets or square equivalents etc. for goods and services. Meanwhile the investment stays with the same company.

This to me hacks the trading system because it uses private contracts & a virtual currency to shift the choice about how money is invested to the consumer & opens up opportunities to make longer sighted investments (that benefit the economy as a whole & the people using this currency) rather than just trying to maximize the profits of an investment fund.

From a "computer hacking" perspective, this is just a mash up of different platforms that have recently developed & using it to create the previously only dreamed of "indexed currencies" etc.

lifeguard 13 years ago |

Howto hack investing: https://en.wikipedia.org/wiki/The_Dogs_of_the_Dow#Results

zygomega 13 years ago | |

I'm thinking of a much shorter time horizon. The problem with long-term investing right here and now is that potential possible futures include many where the long-run risk-asset investor ends up with a big fat zero. Someone, somewhere will have to cough up and accept massive losses to rebalance the economy post QE.

lifeguard 13 years ago | | |

I was being cute. Investing is not trading. Another one of my techniques is to never sell, as long as the dividend yield is better than what I can get in bonds.

beagle3 13 years ago |

I share the intellectual curiosity, but, if this thing turns out to actually work, then it is guaranteed to stopped working shortly after when other people take note of this.

zygomega 13 years ago | |

I hope you're right! Cory Doctorow suggests the main problem for writers is obscurity not intellectual property theft and I think the same can be said about about traders. By the time we get successful enough for people to take notice so that the weight of money destroys the initial edge,, well I think that's a pretty happy place to find yourself. The trick is to find the next edge by then. What we're really banking on is that an open-source approach can obtain results way beyond what you can do initially in walled-off closed-minded intellectual property cubby holes. And then, that the economics of being involved in the open-source project contnue to be biased towards collaboration as opposed to cutting and running with a snapshot. The value isn't in the code - it's in the process that produces and continues to innovate the code.

beagle3 13 years ago | | |

Being a retiree of the trading industry myself (was last involved in HFT in 2007, last at all in 2008) - I believe that's naive.

Every HFT outfit has someone on the lookout for these kind of ideas. When this system is found, every idea in a commit in an obscure branch is going to be quickly reviewed, tested inside that outfit's backtest system (which likely has years of microsecond stamped tick data to test on, and a 1000-core strong compute cluster to do that quickly), and if it has merit -- applied before you have a chance to test it in trading yourself.

Your own success in trading this system is not required (and in fact, unlikely, even if you implement things that would work if done in a non-public way).

I'm not trying to get you not to do it - on the contrary, I love to follow interesting ideas in the field even though I'm not in it anymore. I'm just trying to give my sober, experienced, point of view - if you want it to succeed, this particular thing has to be closed source - you should only commit to public git after your edge has waned....