Interactive brokers offers low fee access to their platform (https://www.interactivebrokers.com/en/index.php?f=13869)
Quantopian (www.quantopian.com) gives you the ability to trade through robinhood with long trades at 0 commission. There has been some skepticism in the Q forums on how well robinhood's execution is (possibly the effect of a "you get what you pay for"-attitude).
Trading real capital with algorithms is more difficult than it sounds. Mentally if you're algorithm is doing stock selection as well as trade execution, you no longer understand what you own. During a period of extended drawdown, you have to be mentally tough enough to believe that your algorithm has what it takes to dig itself out.
In a sense, it is like the start-up game. You have to believe you're doing something well enough that in the end you'll be right (and not bankrupt).
If there's any downside, it's their data. You can't get that much of it historically (1 year max on the minute bars, far less on the second bars, and it takes forever to download it because of the throttling). It's also not...I'm going to say correct...historically. I mean, it is a correct record of what trades happened when. But it includes trades that you won't see when they happen, making it less useful if you're looking for a stream of events as they are happening. Also compared to a broker like Lightspeed (who I haven't tried) their data is expensive.
The software is a big mess, but it's usable. It's always in this weird state where it's 50-75% of the way to being completely awesome, but there's just a few things missing that stop it from being so. Also if I have one nitpicky complaint it's that I can't direct route complex options orders.
Seriously, here's your competition: https://en.wikipedia.org/wiki/Renaissance_Technologies How deluded do you have to be to think you have an edge over that?
People like you stay out.
More to the point, just because a genius mathematician and code breaker started a hedge fund it doesn't at all push out any of the little guys. The market is so large he can't possibly be trading all instruments at once, and "scaling" is a problem for huge hedge funds. Especially ones that have to answer to their shareholders. Even though this is a huge fund, it is highly inflexible.
What you're saying is akin to "Google already does email and they're loaded with geniuses, what makes you think you have an edge over that?"
Or it will get done by people who have thought long and hard about how they are going to compete with the giants, rather than someone naïve sap.
The fact that the question is being asked does not imply that there are no good answers to it, but it is unlikely that someone who hasn't spent time considering how to improve on the incumbents is going to beat them.
For example Taaffeite Capital Management (who gained some publicity for good returns on Brexit) are a < $10mm fund who use IB[1].
Sure, bigger funds have better market access, and it will always be impossible to implement a high frequency trading approach. But these platforms are about as good as a small player can get.
[1] http://www.afr.com/personal-finance/shares/artificial-intell...
I think this goes directly to the "if you use these platforms you are a fool" comment. It seems to me that some people who aren't fools use the platforms, and some who are, don't.
Also, this is HN. Pretty sure there is more than one MIT PhD reading this, and I know there is more than one doing original AI research. Bring this comment to mind: https://twitter.com/paulg/status/28911860225 (exact comment here: https://news.ycombinator.com/item?id=35079)
"if you use these platforms you are a fool"
I said if you use these platforms _and don't have a reason to think you've got an advantage_ you shouldn't be doing so.
Lun and his peers are an exception to this. If you want to make a second argument and say he shouldn't be trading go ahead (and I'll try to back you up), but my original point was about the 99.9% who aren't Lun and are clearly just fish.
Incorrect for the reasons pointed out above, they're trading size, you're likely not, it's a completely different game for them in a completely different field due to their liquidity needs. They are not your competition.
That said, the same logic that holds for identifying profitable strategies within an institution holds for individuals: unless you have better gear, don't fish a crowded pond. As an individual, your small size is, in some regards, an advantage. Institutions routinely pass on strategies that don't have capacity (there's not enough liquidity to make the strategy's returns worthwhile relative to their trading level) or strategies that aren't quite up to their standards (but might be up to yours). There's also a huge class of strategies that have somewhat choppy but long run consistent returns. Traders and funds worried about MoM track records won't touch those.
Fees are the biggest barrier to entry. Institutions enjoy substantial discounts and an ability to amortize costs across a much wider base, making the strategy performance hurdle rate proportionally higher for smaller traders.