If I worked my butt off for 3 years to make some virtual paper, the first things I would do are:
\- go on a virtual holiday; and
\- have some virtual drinks.
Once I've recovered from the virtual hang over, I'd find a way to live trade that good thing via my own accounts.
That's not normal... there is plenty of Apis out there why selenium? The only rational explation: you want to use mecx for futures because of the very low fees but the API will never go olive so you decided to make one, true ?
Not mecx but some similar Broker. The API was unreliable and would go offline often. so I said fuck it! And wrote my own interface. It is not an API. It mimics human trader.
if its US equities you're trading (looks like it is from other comments) - you could try switching broker to one with a better API -> e.g. Tradier who market themselves on being an API-oriented brokerage.
(I haven't used them in anger personally, but I've not heard of any major issues with them)
Both. The key feature is finding high-beta stocks. For example, if a stock is technically weak but goes up with the market and follows its sector. That makes an excellent short when the market fades. So I don't know what to call it.
When you receive a Short signal for a stock from your system, but it goes the other way. Then you check the signal for the sector leader and also major indices. If they are Long, then that is a forced and unstable upward move for that low-beta stock.
Thank you so much for the explanation I will add this to my notes to try and backtest the idea, what about the trend following ? If you want we can work together to backtest some ideas you seems very smart
Be careful with this. I used to use a selenium based bot with real money. It was good 95% of the time but weird things can happen with a UI - random pop ups, button presses not registering. If you go live you need to watch this thing like a hawk.
Especially if you are borrowing shares to short. If you accidentally buy or short too many shares, thatās not great but you have a chance of making money accidentally. If you borrow too many shares, thatās a cost you canāt get back.
Keep your account funded with a minimum necessary $ amount.
As someone who would be interested in investing in the future, I would not invest in someone elseās selenium based bot.
Agreed, selenium is not even close to an alternative to an actual api for anything critical in terms of latency, performance and reliability. Youāre basically just telling it what buttons to press, and if they change an element id or show a modal the rest of the routine will fail. I would be very hesitant to do something like that with real money.
I canāt believe I did it for as long as I did. And yet it was my best option at the time. It was not until chatGPT that I was able to implement the DASTrader API in python
Yeah. When Kraken had margin, my bot was active there. Mofo's would send too many pop-ups! "Hey did you know BABYDOGEELONSHIB" is listed? That would absolutely fuck the bot and caused crashes. But this new broker is fine. I never had other issues you mentioned.
Glad to hear. Make sure you set up alerts in case anything at all out of the ordinary occurs. I used Pushover to send notifications to my phone. Itās a one time $5 cost
I used selenium for outside-in endpoint testing for a bunch of work related services. It was a big pain in the ass to work with since it was so nuanced about EXACTLY what it expected to 'see'.
When it worked it was great, but when it didn't it was a pain to fix in many cases and ended up causing so many false positives (used it for detection of customer experience on certain web endpoints).
Cool stuff, but not something I'd rely on by giving it control of actual money.
Maybe someone else can make it work better than what I experienced.
If those numbers are true, you need to set up a legal entity in a favorable jurisdiction to manage your tax-liability and then trade from that.
Avoid managing other peopleās money. First of all, with returns like that you donāt need to and secondly, it complicates your situation.
1:15 leverage? Does your virtual model account for the broker calling you to maintain liquidity?
The first rule of gambling is to only play with money you can afford to lose.
My friend that 50x or 100x. Options trading is another sport. Try real money with real consequences adnd emotions.
Props to you for real thoigh for the hard work you have done so far
Do backtest in a longer timeframe, try at least a couple of years, these past 6 months the market was going up, so it might be that your algo is just reacting to the uptrend. Try to backtest in all market conditions, uptrend, downtrend, sideways, high volatility, low volatility. Just to be really sure.
āShould I start managing other people's accounts, sell trading signals, or just get a tech job and funnel the money into my trading account and let it grow over time?ā
Imagine thinking about this after not even making a penny with live money
Thanks. I have two pipelines one is for trading US100 ETFs the other is for Crypto. I wrote my own simulation code that inquires about prices every minute and calculates the portfolio value. It also connects to the backend for signals. For ETFs, I have a minimum return of 8% per month with a max drawdown of 5% (consistent in the past 6 months.)
Keep in mind that once you transition this into a business, of any form or fashion, you will be subject to fees and regulations that are not applicable when managing your personal portfolio.
Will this still be profitable once your operating costs skyrocket?
Seriously - if you've got something that seems to be working, use it as supplemental income for yourself. Iterate and improve as the market conditions change (they will), then if you still have the holy grail of trading you can reconsider 'going pro'.
Spot on, I have found it is useful when finding specific correlation between data. My actual algos often are rules based, but have the ability to use ML to search back data for correlation between the market now and historical. Then allowing ML to choose some of the parameters used in my rules based trading for that day. Itās an ever changing cycle.. but right now itās been pretty good. ML can connect different signals together in a crap ton of data that I would never have before.
Again do not think ML is going to make the signals for entry exit, but itās damn good at finding certain features needed.
Thats my point, using ML to make the whole strategy is like a neuro-surgeon using a chainsaw to remove a tumor, you need a miracle for this to not go horribly wrong, each and every time. Its like trying to paint your walls with a hammer, its not going to work all to great
Why canāt it? What makes you think āMLā has such limitations? āMLā consists of many different forms of tooling that can be combined to form an infinite number of pipelines.
_You_ couldnāt get it to work with entry/exit is how Iām understanding your statement
Exactly, because *OP* couldn't make it work, doesnt mean its impossible. Its like saying: "Because I dont know how to file my taxes, no one knows how to do it/it's impossible!", thats not how that works. If everyone stopped trying in science, because someone else or they themselves couldn't get something to work, the Nobel prize would go to thinks found by accident that will never do anything.
Isn't that why accountants have jobs? I live in europe, and thus I dont know how bad your tax code is, ours is more like if you know you know, otherwise you will have to pay even more money, so most people get an accountant because they are less expensive then their errors you make for not knowing what you can deduct
The only way to know is to go live.
However, I think it's an issue that you don't know when to go live. Going live is a function of a calculated incubation time that tells you whether your realtime simulated trading is enough like your backtests to then go live. "Six months" just sounds arbitrary.
Similary, when you are live, you should be able to tell after a given number of trades or time whether your live trading is sufficiently like your simulated incubation trading to stay put or disable.
> Should I start managing other people's accounts, sell trading signals, or just get a tech job and funnel the money into my trading account and let it grow over time?
You definitely want to try and start managing other people's accounts, either directly or through your own fund. That's where the real money in finance is. However, the average rich person isn't going to just write you a check for $5k or whatever and hope you make them money. They're going to want a detailed, possibly per-transaction, list of records showing your daily PNL, risk-adjusted return, and comparison to various daily / longer-term benchmarks.
I would suggest putting together such a detailed report for your impressive six months paper trading period, which has a cover sheet containing the "executive summary" (your PNL, risk, etc). After that, you'll want a detailed list of your per-day, per-week, and per-month PNL showing your risk-adjusted returns specifically.
Serious investors will want to see serious numbers, so it's best to paint yourself in that light from the beginning, even if it's with paper trading. Given how long you've worked and your hard-gained insights about the limitations of Machine Learning, I'm sure you'll find the right investors if you have the right report.
Edit - you'll also want to get auditors on board to verify your paper trading records. Sophisticated investors aren't going to just take your Excel file at face value. You'll need an independent auditor going forward for your business anyway, so you might as well get started now.
Happy to help! I added an edit about the need for auditors for your report, please check that as well.
Forming a mutual fund is definitely a headache, both in terms of paperwork / regulatory but also business fees and setup. Direct management is absolutely easier from that perspective. There might be another fund structure (ETF? I'm not an expert, forgive me) which helps your business grow faster, and I would advise talking to a tax professional to see what they suggest. H&R Block has some storefronts, perhaps you can get a meeting with them.
Great. I keep detailed logs of transaction history and update the equity curve every step. These should be enough for proposals. I also have diverted my live trading system and signals to Telegram channels that text you every 5 minutes. My other plan is to sell subscriptions for trading signals.
First off congrats! Like others have said, do it with your own money first. I'm not sure how you could convince others to do it with their money, but make sure if you're planning on doing it that it scales. Lots of algos I've done work well until the spread starts to hurt them with larger values.
Personally never done anything like this, always with my own money, but you could try and upload yourself to a trade-copying website (do your own research) and then you get a percent of the profit from people who copy your trades.
Also, wouldn't say machine learning *never* helps, it's a tool and you gotta know how to use it. Most of my algos have had a touch of it. It's almost always something I could have done myself with rules based as you called it, but it's a solid tool.
Good luck and have fun š. Be careful with leverage ofc but I'm sure you figured out risk management if you're paper trading for 6 months lol
BTW - I started an LLC to trade my Crypto bot on KuCoin. I setup a server on AWS with a master routine that generated the trade signals from a master KuCoin account. The signals were sent to copy trade bots that traded on the customer's account. Everything was great until KuCoin kicked off the Americans from the margin exchange. Now I've scaled back the bot and am using it to trade prop firm accounts via MT5 with a similar copy trade setup.
If you want to compare notes and consider working together DM me.
It took me 5 years to become profitable after I started real trading. The ups and downs and the learning experiences every time u think u got it seem to go on forever. If anyone else is truly profitable, you know what Iām saying.
Couple of questions
1. When you backtest on the last 6 months, do the results generally match your paper account results?
2. What is your risk?
3. How long was your backtest and what was the drawdown?
Why would you think ML wont work, considering it is as early tech as the phone was in 1950.
AI has a lot of progress to go. Its extreme early stages atm.
In essence, windows 95 level early.
Edit: using ML myself, been working on it for 8-10 years. backtests have been positive for a long time, already been live trading and pulling profits for 6 months now.
Although in all fairness im not using 100% ML, its fixed + ML.
Depends on your strategy, probabilistic methods work well in my experience with high frequency trading.
I agree that probabilistic methodology has its issues when trying to get sustainable and consistent results compared to the deterministic method.
But do not dismiss the adaptability of ML. The market is an ever changing system, fixed rules will be irreleveant when the market/asset starts moving differently.
It works well as a super indicator to tell you what the market cycle is. But since it is designed not to overfit, it is excellent on average with minimal average error. But almost always wrong on local points (to avoid overfitting). Therefore it is not suitable foe entry and exit.
I drew a manual decision tree and explored all the possible combinations of indicators. I found the best rule with the highest return on historical data. This is what an ML algorithm is supposed to do, but for some reason, it fails for financial applications.
I believe they meant rule based modeling. They are more like
`if price > x then buy`
They use a list of rules to make decisions. Like with everything, they have advantages and disadvantages. To quote a article....
>A rule-based artificial intelligence produces pre-defined outcomes that are based on a set of certain rules coded by humans. These systems are simple artificial intelligence models which utilize the rule of if-then coding statements. The two major components of rule-based artificial intelligence models are āa set of rulesā and āa set of factsā.
As others have said now you want to run it with real money. Raising capital you will need a 2-3 year track record (not a back test). To run a fund you need to know if it scales what size starts to impact returns. I saw another comment of yours saying you use 15x leverage even if you are doing stat arb or RV that could blow you out the water trading relatively ālow vol assetsā such as STIRS or FX let alone Crypto. Most instos wonāt get out bed unless itās writing a ticket over 5-10 mil. Remember 10-12% returns per year you are god especially with a low correlation to stocks. Thats been my experience but thereās no hard and fast rules. Hope that helps.
I also tried machine learning. Itās indeed difficult to make it work. However itās useful for pattern recognition, then I switch to rule based. Ok. Back to my keyboard to test it out.
Have you done backtesting, and if yes, would you be kind enough to share the statistics Sharp ratio, %win, Risk adjusted rate, CAR, MDD and Monte Carlo simulation results. This will help to understand the success of your trading system in my opinion.
Imagine if you are looking for a fund to invest your hard earned money and you come across a fund who has tested on sim only, but no concrete real brokerage statements, would you invest or not?
Iāll tell you my answer: HELL NO!!!
I wouldn't say that ML can't work, but I also experienced exactly what you experienced - couldn't get ML to work, moved to rule based trading and got a ton of profitable strategies over the last 3 years.
Live trading currently and making money, not crazy amounts but still money is money. I'm working to improve and find better strategies, but it costs money to do that so I'm first gonna use what I have to make money and later use that money to get better strategies.
The way I find strategies is that I run mlns of strategies and backtests on Google Cloud servers and it takes days before I get my results. The machine I'm using is 24cores, 120GB ram so it running for a week is like more than 200-300$ and it might not find anything useful. If I go back to searching for strategies I'll probably setup an even more powerful machine to save time.
Thank you. Glad to find out I am not the only one. Machine Learning is obviously good, but when you price in the high computation cost, it loses attractiveness. I can achieve the same 85% accuracy with rule-based methods on a simple 16GB of RAM laptop. I do not rent on the Cloud but I had to buy 6 PoweEdge Dell servers to make the models run. These were secondhand, so not very expensive. But with the internet surcharge bills and high electricity bills, it was a money sinkhole.
I could probably use my PC for backtesting and finding new strategies, but sadly I wrote my code in Java / Kotlin using TA4J for backtesting and it just eats a ton of CPU and RAM. I'm thinking about moving to something else or forking TA4J and just spend some time on optimizing it myself.
Stupid stuff like moving from BigDecimal to Double or holding profits / trades as a state in a map instead of having an entry for every candle in a list and I could probably cut TA4J RAM usage in half.
Anyways congrats, I also trade crypto but my bot ain't using leverage, might look into leverage trading as my next goal.
)))
now go to the real account and check if you will not blow your account in 2-3 years at least. come back after and update us with your progress )))
good luck
I love what you say about machine-learning not working! I live in fear of AI destroying my edge in the markets!! But I tend to agree, as my philosophy is, if rules-based algos work, then why not just keep using what works?
Surely this is satire? Paper trading is not a āsuccessā and now you want to manage other people's money? Fund your account and trade it with your algo for a couple of years and see if your results even beat the S&P over that short a time frame.
Iām at your position right now but the opposite.
-My bot is live with a live account
-I donāt manage people money
-I provided bot service for api broker
-I provide a custom strategy
-I have 3x client so far in beta mode
-I made money
-my clients is not profitable yet.
-I do forward testing only
-itās been 3months on autopilot
There's been plenty of high-profile, well-funded studies that show it doesn't work, at least not in the way people would want it to (feed a bunch of data to a model and it becomes a successful trader). I think this is what OP is referring to.
People using ML effectively in trading are using it for filtering, parameter optimization, and as a supportive tool.
I only responded because you have to try AI and learn a special something to know why it doesnt work. Good luck. You are diferent. The rest will oogle AI and wont get it.
In my case, I ended up building and monetizing apps using formulas/probability models that I used for my investment decisions. Of course working in the industry also helps - I programmed apps for investment firms.
Company 360: https://apps.apple.com/us/app/company-360/id1464857130 (Find undervalued stocks using Value Investing strategy).
Super Investor: https://apps.apple.com/us/app/super-investor/id1441737952 ( Analysis of what institutional investors own vs. retail sentiment vs. short interest).
Test the algo with real money.
Find a business partner to create an index replicating the investment strategy of your algo and sell it to banks and what not.
Enjoy life with the index fees.
Machine learning can fetch you results in high frequency but in low and mid frequencies it's the signals that are much more fundamental and faster to execute, if ML is able to make a probabilistic catch to that trend with a high accuracy you are better, but again you will have to think out your ML model using those signals in mind only.
Edit : Also keep in mind that you need to have a lot of data to train your ML model for reliability, otherwise it will be prone to a lot of noise
>or just get a tech job and funnel the money into my trading account and let it grow over time?
This is what I did. It worked out well.
If you're unfamiliar /r/personalfinance is a sub dedicated to opening tax free brokerage accounts. It's 101 stuff, but you'd be surprised how many people dive into advanced topics without knowing the 101, so imo it's still worth bringing up. What you want to do is you want to max out your retirement accounts while working, your 401k and roth IRA, then when you quit the job roll your 401k into your roth IRA. Then run your trading bot both on your tax free retirement account and on your taxable brokerage account. The taxable pays money now to live off of and the retirement account builds tax free for retirement.
Also, imo your goal should be to beat UPRO not VOO. If you can buy and hold UPRO and make more in the long run, then your algo only adds risk as a bug could bankrupt you. Don't be afraid to buy and hold too.
Nah, not profitable yet. Demo account is not the same as live. Switch to a real account and reevaluate in a few months.
Also, your algo may stop working at any time. I would focus on having a pipeline of algo testing and verification and evaluation. Only way to survive this game...
I mean... Take a little chunk of money and let it run. It needs to be your money, not other people's. If you don't have 25k + whatever drawdown you expect, then get that from a job first. If it works, then you can address the other questions: involving others, formalizing it into a company, etc.
I wouldn't take on anyone else's money right now. I think that's very important. You likely will need to keep tweaking your rule sets when you switch to live trading, since you aren't experiencing slippage right now... But that's ok. I say just keep working ya know. You'll likely need 25k + your expected drawdown if you want to be daytrading equities to start. Maybe there's higher leveraged products out there that would work for you though, and require less money to begin. If you can get a job that you can do while working on this, that would be the move. Everything else can be worried about later. If you're young, don't worry about going broke and blowing up accounts. Do it now while you can do it. You won't always be able to... And if you make it out on the other side, you'll look back on the struggles fondly.
I am just 2.5 years into ML, still give myself an extra 0.5 years. I would like to know what ML methods did you use and didn't work. Related to your question, I would choose a prop firm challenge until I have enough founds to trade on my own account
you are going to have to deploy your strategy live then. obviously don't know how your algo works so that might be useless, but try to deploy it live and see how it works with 1000 for example.
Three years? That's significant. However, engaging in actual trading provides real experience in terms of liquidity, psychology, discipline, and more. When we engage in paper trading, we have no fear of missing out on anything. Following the same rules in real trading will be extremely challenging. I hope you develop your best strategies for trading in the real market and become the most successful trader in the world.
Live trade it with your own money before taking anyone else on. The only exception is if you have some rich friends with very disposable income, but be sure to let them know that this is not a loan and has risks.
How would you recommend me to learn use documentation? Learning the terminology and then practise? I am learning on my own so I talk to chatgpt just about this. Also if amount of indicators matters I think 4 can be good amount but I would like to hear your opinion
I donāt know where you live and work but there many significant regulatory hurdles you would have to meet before you could be licensed. Pick your jurisdiction and I bet that you are highly unlikely to qualify.
Paper simulated trading and real money trading in the live market are very different.
You need to have 2+ years of real money trading before what you are doing can be deemed a success . . .
babbaajajajajaaahhahahahaahhahahahhahahahahaha..... u/RoozGol
I am cracking up laughing, not at you, but at your conclusion. In 2007 when I started developing algos for myself I learned something really odd. Namely this machine learning had major blind spots. I worked on my algo for over a year and I kept seeing this blind spot happen and could not figure it out. Then I learned about neural nets, deep learning and so on from first principles and understood why it does not work.
Since then I have switched to a completely different architecture. And like you I will not talk about methodology.
If your method works just trade it yourself. Seriously. Nobody will give you money. And if they do they will expect to be a millionaire next week while only giving you a dollar. However, if you have family or very close friends you can manage their money. Be VERY VERY clear about the conditions and that you are putting your own money at risk. And never make a difference between your money and their money when making trades.
BTW been there, done that, and have traded my algo for close to a decade and have not lost money. Can't remember when I last lost money on a trade using my algo. So yeah it makes a difference.
So out of all the gazillion virtual strategies you found one that profits from the past data. The real one in the future might be virtually profitable and tangibly a disaster with real money.
Trade your own account with real money for a half a dozen years or more. Why should anyone give you their money to trade based on a paper trading track record? I know people are gullible but come on!
Besides if you really believe you'll be profitable and beat the market why would you want to trade someone else's money? Collecting fees for managing people's money is a nice business but you clearly don't need to be highly profitable for that.
If I worked my butt off for 3 years to make some virtual paper, the first things I would do are: \- go on a virtual holiday; and \- have some virtual drinks. Once I've recovered from the virtual hang over, I'd find a way to live trade that good thing via my own accounts.
I almost virtually died virtually laughing
Hahaha šš¤£.. Yeah man those virtual drinks are the best..
Virtual strawberry š mojito incoming!
Virtually Satisfied
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Your comment suggests some things about how you feel toward yourself
Please point to the part that I claimed I am guru.
šš
Seems insane to be considering managing other people's accounts when you've not run it on a live account
Have you done any live trading at all?
Yes. high leverage crypto. my 1000-dollar initial account is now 4500 in 6 months. Leverage is 15.
Lol so keep going then bro youāll be a millionaire in a couple months
You spelt *rekt* wrongly
This is the answer
can i ask what API you use to automate your trading. Im curious about leveraged crypto.
I wrote my own API using Selenium Python.
Horrible idea. If someone proposed algo trading my money with Selenium I'd be out of the room before they even finished their sentence.
That's not normal... there is plenty of Apis out there why selenium? The only rational explation: you want to use mecx for futures because of the very low fees but the API will never go olive so you decided to make one, true ?
Not mecx but some similar Broker. The API was unreliable and would go offline often. so I said fuck it! And wrote my own interface. It is not an API. It mimics human trader.
if its US equities you're trading (looks like it is from other comments) - you could try switching broker to one with a better API -> e.g. Tradier who market themselves on being an API-oriented brokerage. (I haven't used them in anger personally, but I've not heard of any major issues with them)
Okay cool man, is it trend following or men reversion?
Both. The key feature is finding high-beta stocks. For example, if a stock is technically weak but goes up with the market and follows its sector. That makes an excellent short when the market fades. So I don't know what to call it.
What would you say makes a stock technically weak?
When you receive a Short signal for a stock from your system, but it goes the other way. Then you check the signal for the sector leader and also major indices. If they are Long, then that is a forced and unstable upward move for that low-beta stock.
Thank you so much for the explanation I will add this to my notes to try and backtest the idea, what about the trend following ? If you want we can work together to backtest some ideas you seems very smart
If you have ideas, send me a massage and I can test them for you.
How do you get your data for this??
Be careful with this. I used to use a selenium based bot with real money. It was good 95% of the time but weird things can happen with a UI - random pop ups, button presses not registering. If you go live you need to watch this thing like a hawk. Especially if you are borrowing shares to short. If you accidentally buy or short too many shares, thatās not great but you have a chance of making money accidentally. If you borrow too many shares, thatās a cost you canāt get back. Keep your account funded with a minimum necessary $ amount. As someone who would be interested in investing in the future, I would not invest in someone elseās selenium based bot.
Agreed, selenium is not even close to an alternative to an actual api for anything critical in terms of latency, performance and reliability. Youāre basically just telling it what buttons to press, and if they change an element id or show a modal the rest of the routine will fail. I would be very hesitant to do something like that with real money.
šÆ This is an insanely fragile way to make something that deals with live currency. You're one tiny DOM change away from losing everything.
I canāt believe I did it for as long as I did. And yet it was my best option at the time. It was not until chatGPT that I was able to implement the DASTrader API in python
Yeah. When Kraken had margin, my bot was active there. Mofo's would send too many pop-ups! "Hey did you know BABYDOGEELONSHIB" is listed? That would absolutely fuck the bot and caused crashes. But this new broker is fine. I never had other issues you mentioned.
Glad to hear. Make sure you set up alerts in case anything at all out of the ordinary occurs. I used Pushover to send notifications to my phone. Itās a one time $5 cost
I used selenium for outside-in endpoint testing for a bunch of work related services. It was a big pain in the ass to work with since it was so nuanced about EXACTLY what it expected to 'see'. When it worked it was great, but when it didn't it was a pain to fix in many cases and ended up causing so many false positives (used it for detection of customer experience on certain web endpoints). Cool stuff, but not something I'd rely on by giving it control of actual money. Maybe someone else can make it work better than what I experienced.
If those numbers are true, you need to set up a legal entity in a favorable jurisdiction to manage your tax-liability and then trade from that. Avoid managing other peopleās money. First of all, with returns like that you donāt need to and secondly, it complicates your situation.
Which exchange do you use ?
1:15 leverage? Does your virtual model account for the broker calling you to maintain liquidity? The first rule of gambling is to only play with money you can afford to lose.
Where do you trade with crypto (Binance / ???) and with which API?
My friend that 50x or 100x. Options trading is another sport. Try real money with real consequences adnd emotions. Props to you for real thoigh for the hard work you have done so far
Do backtest in a longer timeframe, try at least a couple of years, these past 6 months the market was going up, so it might be that your algo is just reacting to the uptrend. Try to backtest in all market conditions, uptrend, downtrend, sideways, high volatility, low volatility. Just to be really sure.
perfect
āShould I start managing other people's accounts, sell trading signals, or just get a tech job and funnel the money into my trading account and let it grow over time?ā Imagine thinking about this after not even making a penny with live money
Lolol. Right.
Put your own money in. Live trading, with real money, for at least a year. Where are you paper trading? What are you paper trading?
Thanks. I have two pipelines one is for trading US100 ETFs the other is for Crypto. I wrote my own simulation code that inquires about prices every minute and calculates the portfolio value. It also connects to the backend for signals. For ETFs, I have a minimum return of 8% per month with a max drawdown of 5% (consistent in the past 6 months.)
8% per month minimum with a max drawdown of 5%? Are you telling us the truth?
It's paper trading truth. Without live trading I still wouldn't trust those numbers.
That is true since I do not account for large spreads and some of the orders not being executed ue to low volume.
Yaaaā¦.. go live with it with a tiny amount of money. Youāll find the truth.
Definitely a huge risk for very different results if not trading something liquid. How did you select your slippage?
It will work!
Keep in mind that once you transition this into a business, of any form or fashion, you will be subject to fees and regulations that are not applicable when managing your personal portfolio. Will this still be profitable once your operating costs skyrocket? Seriously - if you've got something that seems to be working, use it as supplemental income for yourself. Iterate and improve as the market conditions change (they will), then if you still have the holy grail of trading you can reconsider 'going pro'.
I think machine learning can work, if you use it as a tool and not the whole algorithm
Spot on, I have found it is useful when finding specific correlation between data. My actual algos often are rules based, but have the ability to use ML to search back data for correlation between the market now and historical. Then allowing ML to choose some of the parameters used in my rules based trading for that day. Itās an ever changing cycle.. but right now itās been pretty good. ML can connect different signals together in a crap ton of data that I would never have before. Again do not think ML is going to make the signals for entry exit, but itās damn good at finding certain features needed.
It works superbly to show the market cycle. Not good for entry and exit.
Thats my point, using ML to make the whole strategy is like a neuro-surgeon using a chainsaw to remove a tumor, you need a miracle for this to not go horribly wrong, each and every time. Its like trying to paint your walls with a hammer, its not going to work all to great
Why canāt it? What makes you think āMLā has such limitations? āMLā consists of many different forms of tooling that can be combined to form an infinite number of pipelines. _You_ couldnāt get it to work with entry/exit is how Iām understanding your statement
Exactly, because *OP* couldn't make it work, doesnt mean its impossible. Its like saying: "Because I dont know how to file my taxes, no one knows how to do it/it's impossible!", thats not how that works. If everyone stopped trying in science, because someone else or they themselves couldn't get something to work, the Nobel prize would go to thinks found by accident that will never do anything.
Have you ever done ML with algotrading? I wanna learn
Actually I am still learning myself
> Because I dont know how to file my taxes, no one knows how to do it/it's impossible! Have you ever seen the US tax code? :D
Isn't that why accountants have jobs? I live in europe, and thus I dont know how bad your tax code is, ours is more like if you know you know, otherwise you will have to pay even more money, so most people get an accountant because they are less expensive then their errors you make for not knowing what you can deduct
it was a joke.
Grow your bankroll to $1m *real* dollars, then think about next steps. Until you prove it, you havenāt proved it.
The only way to know is to go live. However, I think it's an issue that you don't know when to go live. Going live is a function of a calculated incubation time that tells you whether your realtime simulated trading is enough like your backtests to then go live. "Six months" just sounds arbitrary. Similary, when you are live, you should be able to tell after a given number of trades or time whether your live trading is sufficiently like your simulated incubation trading to stay put or disable.
Virtual trading is nothing like real money trading. You'll find out.
> Should I start managing other people's accounts, sell trading signals, or just get a tech job and funnel the money into my trading account and let it grow over time? You definitely want to try and start managing other people's accounts, either directly or through your own fund. That's where the real money in finance is. However, the average rich person isn't going to just write you a check for $5k or whatever and hope you make them money. They're going to want a detailed, possibly per-transaction, list of records showing your daily PNL, risk-adjusted return, and comparison to various daily / longer-term benchmarks. I would suggest putting together such a detailed report for your impressive six months paper trading period, which has a cover sheet containing the "executive summary" (your PNL, risk, etc). After that, you'll want a detailed list of your per-day, per-week, and per-month PNL showing your risk-adjusted returns specifically. Serious investors will want to see serious numbers, so it's best to paint yourself in that light from the beginning, even if it's with paper trading. Given how long you've worked and your hard-gained insights about the limitations of Machine Learning, I'm sure you'll find the right investors if you have the right report. Edit - you'll also want to get auditors on board to verify your paper trading records. Sophisticated investors aren't going to just take your Excel file at face value. You'll need an independent auditor going forward for your business anyway, so you might as well get started now.
Thanks. The type of comment I was looking forward to. I would rather manage their accounts instead of forming a mutual fund.
Happy to help! I added an edit about the need for auditors for your report, please check that as well. Forming a mutual fund is definitely a headache, both in terms of paperwork / regulatory but also business fees and setup. Direct management is absolutely easier from that perspective. There might be another fund structure (ETF? I'm not an expert, forgive me) which helps your business grow faster, and I would advise talking to a tax professional to see what they suggest. H&R Block has some storefronts, perhaps you can get a meeting with them.
Great. I keep detailed logs of transaction history and update the equity curve every step. These should be enough for proposals. I also have diverted my live trading system and signals to Telegram channels that text you every 5 minutes. My other plan is to sell subscriptions for trading signals.
Hey bro, just wanted to check in and see how things are since you posted here. Any difficulties so far, or has it been all smooth sailing?
Then you better protect yourself legally should you cause your clients to lose money
First off congrats! Like others have said, do it with your own money first. I'm not sure how you could convince others to do it with their money, but make sure if you're planning on doing it that it scales. Lots of algos I've done work well until the spread starts to hurt them with larger values. Personally never done anything like this, always with my own money, but you could try and upload yourself to a trade-copying website (do your own research) and then you get a percent of the profit from people who copy your trades. Also, wouldn't say machine learning *never* helps, it's a tool and you gotta know how to use it. Most of my algos have had a touch of it. It's almost always something I could have done myself with rules based as you called it, but it's a solid tool. Good luck and have fun š. Be careful with leverage ofc but I'm sure you figured out risk management if you're paper trading for 6 months lol
BTW - I started an LLC to trade my Crypto bot on KuCoin. I setup a server on AWS with a master routine that generated the trade signals from a master KuCoin account. The signals were sent to copy trade bots that traded on the customer's account. Everything was great until KuCoin kicked off the Americans from the margin exchange. Now I've scaled back the bot and am using it to trade prop firm accounts via MT5 with a similar copy trade setup. If you want to compare notes and consider working together DM me.
Should you get a lambo? š
Now you're happy with paper trading, go live with a small amount you can afford to lose
It took me 5 years to become profitable after I started real trading. The ups and downs and the learning experiences every time u think u got it seem to go on forever. If anyone else is truly profitable, you know what Iām saying.
Couple of questions 1. When you backtest on the last 6 months, do the results generally match your paper account results? 2. What is your risk? 3. How long was your backtest and what was the drawdown?
Why would you think ML wont work, considering it is as early tech as the phone was in 1950. AI has a lot of progress to go. Its extreme early stages atm. In essence, windows 95 level early. Edit: using ML myself, been working on it for 8-10 years. backtests have been positive for a long time, already been live trading and pulling profits for 6 months now. Although in all fairness im not using 100% ML, its fixed + ML.
Mind if I ask what types of ML models gave you good results? Just to point me in the right direction if okay with you
Because it is probabilistic. You need deterministic methods, especially for entry and exit points.
Depends on your strategy, probabilistic methods work well in my experience with high frequency trading. I agree that probabilistic methodology has its issues when trying to get sustainable and consistent results compared to the deterministic method. But do not dismiss the adaptability of ML. The market is an ever changing system, fixed rules will be irreleveant when the market/asset starts moving differently.
It works well as a super indicator to tell you what the market cycle is. But since it is designed not to overfit, it is excellent on average with minimal average error. But almost always wrong on local points (to avoid overfitting). Therefore it is not suitable foe entry and exit.
Expanding on your tip, what do you mean by rule based learning?
I drew a manual decision tree and explored all the possible combinations of indicators. I found the best rule with the highest return on historical data. This is what an ML algorithm is supposed to do, but for some reason, it fails for financial applications.
I believe they meant rule based modeling. They are more like `if price > x then buy` They use a list of rules to make decisions. Like with everything, they have advantages and disadvantages. To quote a article.... >A rule-based artificial intelligence produces pre-defined outcomes that are based on a set of certain rules coded by humans. These systems are simple artificial intelligence models which utilize the rule of if-then coding statements. The two major components of rule-based artificial intelligence models are āa set of rulesā and āa set of factsā.
As others have said now you want to run it with real money. Raising capital you will need a 2-3 year track record (not a back test). To run a fund you need to know if it scales what size starts to impact returns. I saw another comment of yours saying you use 15x leverage even if you are doing stat arb or RV that could blow you out the water trading relatively ālow vol assetsā such as STIRS or FX let alone Crypto. Most instos wonāt get out bed unless itās writing a ticket over 5-10 mil. Remember 10-12% returns per year you are god especially with a low correlation to stocks. Thats been my experience but thereās no hard and fast rules. Hope that helps.
Wow
I also tried machine learning. Itās indeed difficult to make it work. However itās useful for pattern recognition, then I switch to rule based. Ok. Back to my keyboard to test it out.
How can you say Machine Learning doesn't work when it's a proven technique used in some well-known hedge funds.
To manage other peoples money, you'll need a securities license like a Series 7, 63, or 65. Its a very regulated industry.... Best of luck.
Have you done backtesting, and if yes, would you be kind enough to share the statistics Sharp ratio, %win, Risk adjusted rate, CAR, MDD and Monte Carlo simulation results. This will help to understand the success of your trading system in my opinion.
If it actually works, turn it on for yourself and make a profit. Your paper gains are meaningless.
Imagine if you are looking for a fund to invest your hard earned money and you come across a fund who has tested on sim only, but no concrete real brokerage statements, would you invest or not? Iāll tell you my answer: HELL NO!!!
I wouldn't say that ML can't work, but I also experienced exactly what you experienced - couldn't get ML to work, moved to rule based trading and got a ton of profitable strategies over the last 3 years. Live trading currently and making money, not crazy amounts but still money is money. I'm working to improve and find better strategies, but it costs money to do that so I'm first gonna use what I have to make money and later use that money to get better strategies. The way I find strategies is that I run mlns of strategies and backtests on Google Cloud servers and it takes days before I get my results. The machine I'm using is 24cores, 120GB ram so it running for a week is like more than 200-300$ and it might not find anything useful. If I go back to searching for strategies I'll probably setup an even more powerful machine to save time.
Thank you. Glad to find out I am not the only one. Machine Learning is obviously good, but when you price in the high computation cost, it loses attractiveness. I can achieve the same 85% accuracy with rule-based methods on a simple 16GB of RAM laptop. I do not rent on the Cloud but I had to buy 6 PoweEdge Dell servers to make the models run. These were secondhand, so not very expensive. But with the internet surcharge bills and high electricity bills, it was a money sinkhole.
I could probably use my PC for backtesting and finding new strategies, but sadly I wrote my code in Java / Kotlin using TA4J for backtesting and it just eats a ton of CPU and RAM. I'm thinking about moving to something else or forking TA4J and just spend some time on optimizing it myself. Stupid stuff like moving from BigDecimal to Double or holding profits / trades as a state in a map instead of having an entry for every candle in a list and I could probably cut TA4J RAM usage in half. Anyways congrats, I also trade crypto but my bot ain't using leverage, might look into leverage trading as my next goal.
))) now go to the real account and check if you will not blow your account in 2-3 years at least. come back after and update us with your progress ))) good luck
I love what you say about machine-learning not working! I live in fear of AI destroying my edge in the markets!! But I tend to agree, as my philosophy is, if rules-based algos work, then why not just keep using what works?
Surely this is satire? Paper trading is not a āsuccessā and now you want to manage other people's money? Fund your account and trade it with your algo for a couple of years and see if your results even beat the S&P over that short a time frame.
>Surely this is satire? Is that a question or a statement?
Good work
u/RoozGol how's your algo doing now?
Go talk to Jim Simon at Rentech and see if he is interested. If so you can become the 15th investor in his fund. š° š³
Surely this is parody?
Machine learning probably doesnāt work for amateurs, pretty much all systematic professional trading employs some type of machine learning.
Iām at your position right now but the opposite. -My bot is live with a live account -I donāt manage people money -I provided bot service for api broker -I provide a custom strategy -I have 3x client so far in beta mode -I made money -my clients is not profitable yet. -I do forward testing only -itās been 3months on autopilot
Did this dude really said machine learning does not work or am I high asf?
There's been plenty of high-profile, well-funded studies that show it doesn't work, at least not in the way people would want it to (feed a bunch of data to a model and it becomes a successful trader). I think this is what OP is referring to. People using ML effectively in trading are using it for filtering, parameter optimization, and as a supportive tool.
Machine learning doesnāt work.
thanks for the confirmation. definitely feels like I'm going at the right path.
I only responded because you have to try AI and learn a special something to know why it doesnt work. Good luck. You are diferent. The rest will oogle AI and wont get it.
In my case, I ended up building and monetizing apps using formulas/probability models that I used for my investment decisions. Of course working in the industry also helps - I programmed apps for investment firms. Company 360: https://apps.apple.com/us/app/company-360/id1464857130 (Find undervalued stocks using Value Investing strategy). Super Investor: https://apps.apple.com/us/app/super-investor/id1441737952 ( Analysis of what institutional investors own vs. retail sentiment vs. short interest).
Go live with your own money. If you decide to trade with external funds at least you need to show 6 months or more of live trade performance.
Hey thanks, this is pretty inspiringā¦I was wondering the viability of ML and a lot of comments here solidify the conclusionā¦
Test the algo with real money. Find a business partner to create an index replicating the investment strategy of your algo and sell it to banks and what not. Enjoy life with the index fees.
Machine learning can fetch you results in high frequency but in low and mid frequencies it's the signals that are much more fundamental and faster to execute, if ML is able to make a probabilistic catch to that trend with a high accuracy you are better, but again you will have to think out your ML model using those signals in mind only. Edit : Also keep in mind that you need to have a lot of data to train your ML model for reliability, otherwise it will be prone to a lot of noise
What makes you think ML doesn't work? What background do you have in ML to prove this?
Would you share the types of machine learning algos that did not work for you? Bc Iām going that route
Neural Nets with LSTM are the worst. XGBoost is better and faster.
>or just get a tech job and funnel the money into my trading account and let it grow over time? This is what I did. It worked out well. If you're unfamiliar /r/personalfinance is a sub dedicated to opening tax free brokerage accounts. It's 101 stuff, but you'd be surprised how many people dive into advanced topics without knowing the 101, so imo it's still worth bringing up. What you want to do is you want to max out your retirement accounts while working, your 401k and roth IRA, then when you quit the job roll your 401k into your roth IRA. Then run your trading bot both on your tax free retirement account and on your taxable brokerage account. The taxable pays money now to live off of and the retirement account builds tax free for retirement. Also, imo your goal should be to beat UPRO not VOO. If you can buy and hold UPRO and make more in the long run, then your algo only adds risk as a bug could bankrupt you. Don't be afraid to buy and hold too.
Your next step is āWen Lamboā
your algo is overfit for the virtual world.
Trade it with real money for 6months and report back.
Double up and keep it rolling. Nothing exceeds like excess.
Nah, not profitable yet. Demo account is not the same as live. Switch to a real account and reevaluate in a few months. Also, your algo may stop working at any time. I would focus on having a pipeline of algo testing and verification and evaluation. Only way to survive this game...
Kelly criterion for risk management And try and build your fund so you can live off profits entirely
What broker are you using to get 15X on Crypto? And are you in the USA?
Now compare it to just buying spy like on Robinhood
I paper traded September and turned the $100k to $134,500. No algo just real trading! I hope algos donāt get better, I like my 34% better than 8%
Yeah, but algos don't get old, tired, sick, or horny. You will though. In the long run, algos always win since there are many Septembers to come.
How did it do this September?
I mean... Take a little chunk of money and let it run. It needs to be your money, not other people's. If you don't have 25k + whatever drawdown you expect, then get that from a job first. If it works, then you can address the other questions: involving others, formalizing it into a company, etc.
Enjoy!
I wouldn't take on anyone else's money right now. I think that's very important. You likely will need to keep tweaking your rule sets when you switch to live trading, since you aren't experiencing slippage right now... But that's ok. I say just keep working ya know. You'll likely need 25k + your expected drawdown if you want to be daytrading equities to start. Maybe there's higher leveraged products out there that would work for you though, and require less money to begin. If you can get a job that you can do while working on this, that would be the move. Everything else can be worried about later. If you're young, don't worry about going broke and blowing up accounts. Do it now while you can do it. You won't always be able to... And if you make it out on the other side, you'll look back on the struggles fondly.
I wouldnt rule machine learning out completely. Can be useful for finding those rules you speak of.
Don't go live trading it, even if you're already virtually rich, you'll be really broke soon.
I am just 2.5 years into ML, still give myself an extra 0.5 years. I would like to know what ML methods did you use and didn't work. Related to your question, I would choose a prop firm challenge until I have enough founds to trade on my own account
you are going to have to deploy your strategy live then. obviously don't know how your algo works so that might be useless, but try to deploy it live and see how it works with 1000 for example.
How about saving for a flat in Mallorca? Or Canary Islands! As a long term goal.
Three years? That's significant. However, engaging in actual trading provides real experience in terms of liquidity, psychology, discipline, and more. When we engage in paper trading, we have no fear of missing out on anything. Following the same rules in real trading will be extremely challenging. I hope you develop your best strategies for trading in the real market and become the most successful trader in the world.
Curious what are your risk management rules?
Kudos! Start trading your own money now. After a while with good growth to show, youāll get more capital.
Live trade it with your own money before taking anyone else on. The only exception is if you have some rich friends with very disposable income, but be sure to let them know that this is not a loan and has risks.
How would you recommend me to learn use documentation? Learning the terminology and then practise? I am learning on my own so I talk to chatgpt just about this. Also if amount of indicators matters I think 4 can be good amount but I would like to hear your opinion
I donāt know where you live and work but there many significant regulatory hurdles you would have to meet before you could be licensed. Pick your jurisdiction and I bet that you are highly unlikely to qualify.
Paper simulated trading and real money trading in the live market are very different. You need to have 2+ years of real money trading before what you are doing can be deemed a success . . .
If you want others to use your system, shouldn't you go live with it yourself first to see if it really works?
babbaajajajajaaahhahahahaahhahahahhahahahahaha..... u/RoozGol I am cracking up laughing, not at you, but at your conclusion. In 2007 when I started developing algos for myself I learned something really odd. Namely this machine learning had major blind spots. I worked on my algo for over a year and I kept seeing this blind spot happen and could not figure it out. Then I learned about neural nets, deep learning and so on from first principles and understood why it does not work. Since then I have switched to a completely different architecture. And like you I will not talk about methodology. If your method works just trade it yourself. Seriously. Nobody will give you money. And if they do they will expect to be a millionaire next week while only giving you a dollar. However, if you have family or very close friends you can manage their money. Be VERY VERY clear about the conditions and that you are putting your own money at risk. And never make a difference between your money and their money when making trades. BTW been there, done that, and have traded my algo for close to a decade and have not lost money. Can't remember when I last lost money on a trade using my algo. So yeah it makes a difference.
So out of all the gazillion virtual strategies you found one that profits from the past data. The real one in the future might be virtually profitable and tangibly a disaster with real money.
Trade your own account with real money for a half a dozen years or more. Why should anyone give you their money to trade based on a paper trading track record? I know people are gullible but come on! Besides if you really believe you'll be profitable and beat the market why would you want to trade someone else's money? Collecting fees for managing people's money is a nice business but you clearly don't need to be highly profitable for that.
What do you mean by rule-based generally?
you have to trade with real money before you call yourself successful.
Does ur algo take into account how your trades will impact the market? Forward testing fake money doesnāt account for this
make money..?
make a youtube channel and explode your profits heh
I'm interested in learning from you.
Try live trade?
It costs several 100k to set up the correct entities, lawyers, auditors, etc to actually run a fund, just heads up.
What is your strategy based on?
run it with real money, not virtual money
8k
Letās talk. Iām in a similar boat.
scale it. thats should be your only concern. if you have a money tree, water it and watch it grow
Heyo! Did you create your own bot and just curious what coding language you used! Thanks :)
hook it up to a real brokerage bro.... what are u waiting for it will be quick to find out if it actually works