Quantopian Brings Algorithmic Trading To The Masses: EBSCOhost

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Title: Quantopian Brings Algorithmic Trading To The Masses. By: Geron, Tomio, Forbes.com, 1/ !/ "1! Database: Business #ource $remier

Quantopian Brings Algorithmic Trading To The Masses

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T%&' 'igh (re)uency trading has been scrutini*ed in recent years because o( its lin+s to (inancial scares li+e the Flash &rash. But the actual algorithms used to po,er much o( high (re)uency trading are not ,ell understood, and loc+ed up in hedge (unds and large (inancial (irms. #tartup Quantopian, ,hich is coming out o( beta today, aims to ma+e these algorithms a-ailable to a much larger audience. The company, ,hich has raised an unspeci(ied seed (inancing (rom #par+ &apital and mar+et ma+er G%T&., pro-ides bro,ser/based tools (or anyone ,ith basic programming +no,ledge to create algorithms and simulate actual trading ,ith them. 0ohn 1Fa,ce1 Fa,cett started the company in "11 and brought in co(ounder and &T. 0ean Bredeche, ,ho he pre-iously ,or+ed ,ith at Tamale #o(t,are and Ad-ent #o(t,are. Quantopian pro-ides mar+et and company data (or people to create their algorithms. They ,rite the code on Quantopian2s site, then can run the algorithm on the site2s bac+/testing simulation to see ho, they ,ould2-e per(ormed historically. All algorithms are pri-ate by de(ault. Quantopian does not ha-e connections to li-e trading yet, but e-entually plans to add that so traders can use their algorithms to trade through third party bro+ers. Quantopian has made its bac+ tester tool open source to enable others to assist in de-eloping the tool. $eople ,ho trade stoc+s and other securities based on algorithms and other )uantitati-e methods/the 1)uants1/are a relati-ely small number o( about 1",""" people ,orld,ide, says Fa,cett, (ounder and &%. o( Quantopian. Most o( the large (irms ha-e built their o,n proprietary systems to manage their o,n algorithms. As a result, up until no,, only those

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Quantopian Brings Algorithmic Trading To The Masses: EBSCOhost

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large firms have had access to the ability to quickly make and test these types of algorithms. "We think that's inherently dangerous for the population at large," he says. "Things like the flash crash are amplified by the small number of people involved." People who use uantopian come from a broader variety of backgrounds. !ome are not in finance but are "ust interested in testing a trading idea. These people could be a physics Ph.#.'s, other academics or math or engineering specialists who may not even know programming. The uantopian platform is designed to do for algorithmic trading what $eroku did to make %uby on %ails faster and easier to build web applications, says &ean 'redeche, cofounder and (T) at uantopian. The types of strategies people could develop on uantopian could include technical strategies, a classic e*ample of which would be when a +,-day moving average crosses a .,-day moving average. The other type of strategies are more statistical analyses in which people set some criteria and try to find certain securities that match that criteria. These are "ust basic e*amples, but people can create whatever algorithms they want on the platform. The company now plans to develop the ability to integrate live trading and also develop its community features. The site's current forum enables people to ask others for help in writing an algorithm and has become quite active, /awcett says. The site also provides sample algorithms that can be "cloned" and changed. uantopian currently doesn't offer tools for consumers or average investors to use, but that could be a natural move in the future. "0s uantopian becomes successful it will blur the line between someone who's a consumer and a professional for quantitative trading. That will allow the best ideas to emerge," says 0ndrew Parker, principal at !park (apital. 11111111 'y Tomio 2eron, /orbes !taff

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