That's exactly why I thought it was important to make this video, despite it being (potentially overly) simplistic and unexpected. People don't realize just how much time and effort goes into ones work in the world of quantitative trading. Firms literally have entire teams of 50+ people, each putting in 8 hours a day at least, to compete on a global stage against other firms that have virtually unlimited time, money, and resources to invest in squeezing out as much alpha as possible. Not only that, but each software engineer, as they develop in their careers, starts specializing in various subdomains of applications in the organization. You can be a software engineer that specializes in risk systems, which sit primarily in the pre-trade (risk mitigation) and post-trade (risk reporting, aggregation) phases of the trading process - in theory you can have 10+ years of experience as a software engineer in quantitative trading and never work on anything related to order-entry (strategies). I'm fortunate enough to have worked on many services spanning from order execution, to market data, to internal tooling, to risk systems, but that doesn't mean that I i) want to spend my time outside of work building these systems from scratch and ii) am arrogant enough to think that I can outpace firms who have dozens of employees working around the clock. Questions like "Why don't you just be a one-man-band / implement quantitative strategies on your own" are rooted in ignorance. The more you know, and the more you work on critical systems in conjunction with other bright individuals, the more you understand just how futile it would be to compete on the same playing field as an individual. It's also important to note that, just as traders don't necessarily understand the code that runs behind the algorithms they control, so too do developers not necessarily have a detailed understanding of the model development, and trade execution that is involved in controlling the algorithms that they work on (to the point where they can simply replicate them, and iterate on them, outside of the workplace; neither do I think this is legal). I'd personally rather pursue something simple and time-tested, knowing that over time I'll at most have a humble outperformance (and at worse, match the markets performance, which is still a feat that most hedge funds cannot achieve), than waste hours of my free time throwing money down the drain trying to compete with the titans of the industry. Smart people simplify, clumsy people 'complexify'.
@@CodingJesusI've been trying a "similar" strategy:-- an ETF sampler with "probabilistic risk"--> say --> [META, MSFT, GOOG, PLTR] now probability of sampling market = 0.75 probability of not sampling market = 0.25 (PLTR is risky but has low probability too) We keep a pool of funds say $10 everyday to cost average across this probability distribution And we can buy on Mondays and Sell any equities in Profit on Fri (for losses we'll keep them as unrealized loss aka "hold") This yields a sharpe ratio of 10% on avg & is also non-deterministic. I published on quant connect too Ultimately I call it probabilistic betting it's fun haha
Right curving it. The high beta thing clicked for me when Lynn alden said, "the bigger you are the more access to credit you have" and we are in a fiat system. It seems to defy physics but bigger really does get bigger when the currency is soft. A lot of people struggle with this so we can just keep going with the trade and the middle curvers will take the other side of it.
Most of profitable trading strategies that we work on are not profitable for retails who pay transaction fees and or are limited in terms of capital etc.
Something pretty cool about buying and holding equities with large time horizons is your variance is actually lower than that of bonds. you also mentioned you would purchase more after the market struggles which is mathematically the right play but many investors are too scared
Learning to trade is the best thing I did. I just turned 18 and grew my small trading account a humble 160% in the first 6 months of this year. This is after losing my ass in 2023 though starting out. my investment portfolio is underperforming and red YTD
As an employee of a hedge or quant trading firm, how are you making these frequent trades? Aren’t you required to buy and hold for 90 days and get permission from your compliance dept before every personal trade? I am even surprised that Robinhood is an approved broker by your employer.
Ive got a question. I’ve been coding strategies for a little while now and my algo portfolio has just got a 2.7 sharpe ratio. I’m hitting about 3% per month (2004-2023 backtests). I just turned 20 and I don’t have any formal education about quant finance, just what I’ve taught myself at the local library. Would it be realistic to try to and get investors like a hedge fund, or should I just focus on improving my strategies and increasing my own capital.
I am 19 and doing my degree in data science i also want to start developing my own algo can you please share some resources. Rn i just sell covered calls on my portfolio.
@@bilalshaikh6603 I just turned 20 a couple days ago and I’m a business major, everything I’ve learned is just from arriving at an issue, guessing and googling, and asking chat gpt 😂 I’m not the person to ask
Would love to know why did you pursue quant dev instead of quant trading, (if you have no problem answering). I see most of your videos and you seem more interested by the trading side than the dev one. Is it because it is way harder to get in? Or simply because dev is safer since it is more like a traditional job and there is wayy (way) more job abundance? Or because you prefer it maybe?
watch his earlier videos, he's smart. learnt C++ and landed a dev job working in quant's. With no disrespect to him but he's more like codes up the theory the quants tell him. He's not had any formal education in quant theory. They are not the same job. the pay and skill difference would be order of a magnitude
He kinda lost me when he started talking about short-term alpha. The S&P has only done ~7% since Jan 2022. So what if you do 100% YTD if you were down 50% last year. That's just breaking even.
dont need to see that based on his words. he sounds like the dude who randomly bought tesla early on a gut feeling, then uses that one performance to give his "investing genius" beating the market speech
Its probably because they don't work at his account scale, nor does he have the execution speed. If he works at a HFT then they probably market make/take and you cant do that with little liquidity and retail brokerages. The "complex strategies" are not complex in themselves (you can literally read about them in books) its the execution part that's hard and beyond an average persons reach think capital, permits to be a MM, access to exchanges at sub-millisecond latency, software engineers etc...
@@kashyap5551 Also the margins are small and based on either fulfilling market orders, or buying up the market orders to position yourself before it hits the tape. So either you have billions of capital at your disposal for small arbitrage movements, or you're paying millions in costs just to eek out a couple extra points advantage, either way it only profits at scale.
awesome vid man. could you make another one about culture in HFT for quants? specifically, how strict is it? how lax? are people like super "on job" when it's time to work, but love to goof around outside of work hours? i'm gearing up to start applying to quant soon, one of the things i think about is "should i cut my hair?". i'm an ethnic dude, my hair (when long) is often seen as unprofessional, literally just because it's not a white dude's hair lol. is this sort of environemnt something you see as common in quant?
Thank you for posting. Great results for the year. I have met a number of quants over the years and they believe the same things as you said. However, let's go a step deeper. You returned 47% in a year that NVDA has gone up over 3X (and your NVDA is up 7x from your buy point). You have index funds and some random under performing stocks. To be honest you are right that even such a poorly managed, poorly position sized account has beaten many other traders out there. But don't for a second think that you are exceptionally smart or skilled. Even within your own method, you have managed poorly. You yourself could benefit from going 100 percent market index funds. Your picks and position sizing is an indication of your skill level and understanding of the market as an imvestor. You maybe a great quant but by no means you are an exceptional investor or fund manager. Hope you take a second during those bathroom trading hours and come to your senses. Good luck!
Glad to see you're back and love the videos. Random investment thought but I think TLT and YINN are interesting ETF plays right now. YINN is obviously very high risk but you said you have an appetite for that :)
do you care about international diversification / what do you think about buying a world market cap weighted etf like vanguard. and what are some of the high beta etfs you invest in?
By revealing how much you have lost on each, you revealed your position size on each and based on the number of digits and size of the black blur, the number of digits of the other positions can also be estimated.
Would love to hear a breakdown of cost of living/budgeting. I noticed at the end you said you invest about 15% of your paycheck, what else do you prioritize?
Wow, what a bulletproof strategy - “I buy ETFs that align with my risk profile, so I’m buying ETFs that score higher on that risk scale” … great & all👌🏻… but how do you do now of those 47 percents? 😅
My neighbor runs a large firm on Jackson. I work for a data analysis firm that’s on S Michigan Ave just around the corner. We handle analytics for forex and futures markets.
Why do you benchmark your portfolio to the market? I guess it makes sense if those are your only two options, but don’t most quant strategies act as diversifiers to market returns?
Coding Jesus what career should i pursue if I have high verbal Iq (130+) but really low performance iq (108) ? I work at a consultancy but fail many logic/numerical based tasks...
If 15% of your paycheck goes to these stocks, does the remaining money you save go to index funds? What do you do with your other savings/retirement money?
this is a 25k portfolio calculating from the things he forgot to hide, he's lying (also 46% is gain not even his money he put in the portfolio). Hes not putting 15% of savings. Nowhere near.
@@daveanderson8348 u can literally see the numbers + calculate from numb of shares /loss/gain he mentions and u can calculate how many shares he has at what price. He has around 2500 dollars/position and he says each position is around 10% so I assume 25k + I see 4500 purchase power so free cash. Tot 30k portfolio. He has not been saving 10% for years, he lied.
Because it's the best way. Even better is to fuse traditional long-only investing with quantitative-statistical models and algos and let your models run your portfolio for you. That is then you see real magic happen. Those who engage in purely trading are clueless people that lack knowledge and insight.
What do you mean by 'packing your hairs'? How do you prefer my hair? Haha. If you mean let it down, sometimes it's frizzy. I need to prepare it better before videos if I'm to have it down.
@@CodingJesus great video coding Jesus! do you think the power of buy-and-holding-stock-strategy will diminish along with the rise of the passive investing? In an interview of David Einhorn he basically says that due to the rise of passive investing, the undervalued stocks will not be going back up to its intrinsic value because a lot of the big stock buyers have turned passive and thus won't drive up the the stock price anymore. I'd love to know what's your thoughts about it!
Since you invest 15% of your pay check are you constantly buying more of the same stocks are does it vary based on what you believe to be another good investment. I.e. you have 1000 in Russell your 15% is 500 do you put that whole 500 into Russell or 100 russell 100 spy 100 etsy 200 nvidia
he is not, he's hiding the truth, you can see the numbers here he forgot to hide everything + u can calculate based on his average price + losses + he says positions are around 10% Calculating from that, he has around 25k in this portfolio + 5k cash...30k..."I did 46%" he said lmao...yeah 46% on a 25k portfolio by just buying magnificent 7s and going tru the biggest bull market in the last decades...
To be honest- this is super disappointing. I was expecting something interesting and sophisticated. The reality? Coding Jesus buys high beta stonks on robinhood. Maybe there is hope for me in quant trading after all...
Anytime I have money, I invest. If I get my bonus, I put the bulk of it in all at once (lump sum). When it comes to paycheque, I put a percentage of it in (DCA).
u beat the day traders not only that u even BEAT SP500 and most of the HEDGE FUNDS with that return. WOW AMAZING! i mean u most be the best trader or investor in your FIRM.
There is a lot of research about avoiding stock picking because in the long run you will under perform the market with high probability, is there a reason for this choice? Moreover is there a reason to be 100% exposed to America and nothing else?
Since I know how difficult and resource intensive it is to run a quantitative trading operation and compete at that level (it’s a multi-person resource and time intensive business), I choose to keep it simple and stress-free.
You can have a buy and hold strategy rebalanced monthly and for me at least that isnt pretty intensive work while still outperforming the market. Just takes 5mins a month, can just enter and exit positions without caring about the market price at all. We gotta adapt no way I'm gonna compete with HTF firms for example😅 @@CodingJesus
he is a quant dev, not a trader, pretty sure he barely ever traded, and as far as i have seen this guy has taken the 99.5% statistic so far up his arse that pretty much never tried. bro is one of those person who reads a statistical data about how 99.5% startups fails, so he never does entrepreneurial ventures. im not saying everyone makes as trader or even beat the market but this guy is just soo risk averse about anything and is happy with his "Safe" avg life. sorry but statistics are mere averages. and bro is happy with being the average.
he is trully smart person. i believe hes work on HFT firm. but he's not just risk seeker person. sometimes jobs stay at works. he just treat stock just as a hobby i guess and just doing risk premia harvesting stuff. just buy what his senior or friends doing basically
Exactly, investing is better than trading. Many hedge funds don't get this too, they keep trading without holding for long term. Look at Warren Buffett, he holds long term and during his first 30 years he destroyed the S&P 500, obviously it's harder for him to keep up with the market considering that the bigger a company gets they slower they can grow relative to their rapid growth period.
Medium risk account got 42% and high risk account got 73% in one year. If you understand computer semiconductors and ML, it was an easy year to make money. I doubt I’ll be able to do it again next year. I haven’t found a new edge I understand yet.
Can we all at least agree that there is something very fishy about a supposed "expert" describing how he beats almost every other trader out there ---- when in fact in the video his lip movements do not even match the audio??? I trade very successfully, including daytrading, and I would not give 5 cents for the trading insights this guy offers.
@@iam8333 Sure does! I trade very successfully, including daytrading (which they all say everyone loses at), and I have not lowered myself to post ANY videos! I fully understand why conmen post trading videos, but I still cannot figure out why rich, highly profitable traders will post videos. They don't need the money or up-thumbs!
So quantitative trading is just buying and holding stocks? Doesn’t sound like much of an edge. And I’m guessing you didn’t beat 99.5% of traders during 2022. There’s nothing wrong with buying and holding. It’s smart. But that’s no edge. 😂
What are you talking about 😅 robinhood is shite and every real investor uses a real brokerage. Even if you hold long term you shouldn’t use such a shitty brokerage.
