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Re:Why I don't trade stocks and (probably) neither should you by crntaylor on Monday December 02, 2013 @02:03AM (#6832231)
There are, broadly speaking, three kinds of quant funds that trade equities -

1. High frequency trading firms with sub-millisecond latency, who make their money from the bid-offer spread. You can't compete here.

2. Medium term traders who will hold a position for somewhere between hours and weeks. They tend to be looking for statistical regularities to exploit. If they find one, they don't expect it to persist for long - the typical 'half life' of a strategy is around six months. It's not impossible for an amateur to compete here, but be aware that there are thousands (tens of thousands?) of people for whom this is a full time job. Many (most?) of them have backgrounds in quantitative finance, have worked at funds and large investment banks, have PhDs in physics, mathematics, computer science etc. So you should ask yourself why you think you will be able to compete.

3. Long-term traders who are either stock picking, or actively managing a portfolio that might include stocks, bonds, commodities, currencies etc. Some of them are just trying to beat the market, and some are looking for absolute return. All the points in the OP article apply to this case.

Re:Why I don't trade stocks and (probably) neither should you by sliverstorm on Monday December 02, 2013 @02:42AM (#6832351)
you should ask yourself why you think you will be able to compete.

I don't want to win, I just want to be in the race (and not lose too terribly much). Much the same as how people like to run in marathons they know they can't win. I suspect it would be an interesting blend of things that I like.

Re:Why I don't trade stocks and (probably) neither should you by roel_v on Monday December 02, 2013 @04:14AM (#6832627)
Well the same questions still hold, don't they. Let's say short-term trading is a zero sum game (it probably isn't, but it's not much in the plus, either - I'd like to be proven wrong though). Then the question becomes - what do you think you have to bring to the game that will put you ahead of the bottom 50%. Or bottom 25%, if you can stomach losses that big. Keep in mind that 90, 95% or so of the people playing your game are professionals with large institutional backing, advanced degrees and years of experience.

You could argue that the bottom 50% are just the suckers - but of course, those who are worse than them have already been selected out. So the 'losers' you're competing with are either the newcomers, or those who did well in the past but are having a bad spree now.

What is going to be your strategy? If you're just going to apply Black-Scholes, well there are 1000's of people already doing that much better than you ever will. So you need a unique approach - either industry insight that you can quantify somehow, an unexplored statistical approach you know more about than most others.

Re:Why I don't trade stocks and (probably) neither should you by sliverstorm on Monday December 02, 2013 @04:31AM (#6832680)
I don't know what my strategy would be, because I need to learn more. I'm still trying to decide if I ought to pursue it.
Re:Why I don't trade stocks and (probably) neither should you by crntaylor on Monday December 02, 2013 @05:11AM (#6832809)
I expect that you will learn a lot, and much of it will be interesting. Some of it will even be applicable outside of finance. Almost certainly you will lose money (through fees and buying data, if nothing else). If you're okay with that, then go ahead.

There's an interesting guide with some suggested reading at

http://quantivity.wordpress.com/2010/01/10/how-to-learn-algo...

Re:Why I don't trade stocks and (probably) neither should you by roel_v on Monday December 02, 2013 @05:52AM (#6832964)
Sure, and I meant it as a rhetorical question. It's just that that is the first question you need to answer for yourself. For me, I could not objectively (even with the most positive assumptions about boundary conditions) answer it 'yes', or even 'maybe'. But still, apart from the strategy, the question remains - what do you have that few others have. You can answer that for yourself even without having a concrete strategy worked out.
Re:Why I don't trade stocks and (probably) neither should you by jpdus on Monday December 02, 2013 @09:59AM (#6833981)
So you need [...] an unexplored statistical approach you know more about than most others.

I have one that I am trading profitably and for which I have written a scientific paper which could be published (i.e. I can reasonably explain why the approach works and nobody found it yet).

Still searching for an investor in that space to scale it up; if anyone has ideas or knows who could be interested in seeding such strategies i would be glad about a mail (see profile for contact).

Re:Why I don't trade stocks and (probably) neither should you by shogunmike on Monday December 02, 2013 @03:59AM (#6832588)
It's definitely an interesting area. However, I would start with paper trading (as other comments have suggested), as it is extremely easy to lose a lot of money in quant trading if you're not careful.

There's plenty of "academic interest" to be had without risking any real cash.

Re:Why I don't trade stocks and (probably) neither should you by sliverstorm on Monday December 02, 2013 @04:32AM (#6832684)
Sure, paper trading is a given for at least part of, if not all, of the endeavor.