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How much can the top "player/developer" can earn in Quantopian?

I really wonder whether developing algo for quantopian can be a full time job?

8 responses

Under certain assumptions, the answer is yes, sort of. Assume $5M in capital from Q. Fully leveraged, say your strategy earns 10% per year. If Q is planning to charge 20% to their customers, and split it with the managers, then you'll end up with 1% of $5M, or $50K gross. Looking at , you'd sorta be in the ballpark for certain areas of the U.S. However, you have to deduct taxes, buy your own health and other insurances, fund retirement savings, college savings for the kids, property taxes, and the list goes on. You wouldn't be living large, but could probably survive if you ate a lot of beans and rice.

Of course, you'd need to keep producing algos, and get them funded, since it is unlikely you'd have written an algo with consistent forward performance for 40 years. And Q would always have the option of dropping your algo.

Wow.... What a reply, thank you so much for such a detailed and sensible answer. Much more than I expect for a comment!

It would be interesting to hear about allocations in general, how much ahs been allocated and how much will be allocated in the next year divided by quarters for example.

I'm not sure if the funded people are under NDA but it would be interesting to hear experiences from people funded more than some minimal amount.

Winky -

You're asking a great question. It's something we've given a lot of thought to here at Quantopian. When we offer a royalty contract to an algorithm author, we need that offer to be a compelling one. We need the author to have good incentive to license us his or her intellectual property. We've been pleased with the response so far; the developers we've talked to have given positive replies.

Grant gave a good answer about the payment size, but I'll say it slightly differently. A developer's royalty payments depends on three factors: 1) the size of their allocation 2) the performance of their algorithm and 3) the fraction of the net profit that the developer receives. Today, our allocations are on the smaller side, probably too small for Quantopian to replace what most developers can earn at a full time job.

Our goal is to increase the size of the allocations we make significantly in 2017. I'm sure you heard about our agreement with Steve Cohen. We hope that he is the first of what will be many investors whose money we can allocate. This investor money is what makes larger allocations possible.

I'll give you a completely hypothetical, back-of-the-envelope example answer. Please understand that this is for illustration purposes only and the actual details of any future allocation are sure to vary. The details of the calculation of net profit and the payment schedule are not covered in this simple example.

  • allocation: $3 million, levered 6X to $18 million trading allocation
  • algorithm net profit: $1.44 million return in one year (8% return)
  • author's share of net profit: 10%
  • author's royalty payment: $144,000


So far all of our allocations have been funded by Quantopian itself, the proprietary trading we have talked about before. We have 16 allocations trading today with an average allocation size of about $100,000. We don't plan to make specific forward looking statements about future allocations, but you can see our general intentions.


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Hi Dan -

It's something we've given a lot of thought to here at Quantopian. When we offer a royalty contract to an algorithm author, we need that offer to be a compelling one. We need the author to have good incentive to license us his or her intellectual property. We've been pleased with the response so far; the developers we've talked to have given positive replies.

I gather that your overall strategy is for select members of the crowd to become semi-professional quants. I recall having an informal conversation with two of your colleagues at QuantCon 2015, and a number like $100M in capital allocation per strategy was thrown out (not unrealistic in the institutional world). The statement surprised me and my response was that at that level, it'd be (like) a full-time job. It was inconsistent with the crowd-sourcing concept, as I understood it at the time. Initially, there was talk of prospective managers having "skin in the game" and showing real-money performance with their own capital. Clearly, with the contest at $10M, we've moved beyond that thinking and it was perhaps the game plan from the get-go.

For me, large numbers like $18M (and certainly $100M) are actually a dis-incentive, in some respects. Firstly, the level of capital and the style of algo that would be required to manage it don't align at all with what I might do with my own capital. Also, although it sounds wonderful to have another (likely transient) stream of income, I'm pretty darn busy with my day job and personal obligations. I'd be happy to make some "beer money" on Quantopian, but ~$150K per year would really skew things in a direction that probably would not be optimal at this point.

I understand the concept behind "A Professional Quant Equity Workflow" in that you need something proven, familiar, scalable, etc. If you can get users to plug into a well-trodden path, and innovatively tweak it, then you might have something. Also, it should make the job of out-of-sample validation easier; you can get to high levels of capital in your fund faster. Just do what everyone else does in the industry, except globally out-source the quant function; a guy in a mud hut with an internet connection on a tiny island in the Pacific could get an allocation.

It is a researchy/blue sky/academic question that is hard to "sell" and maybe wouldn't work at all, but have you put any thought into what it would look like if you could engage and pay all 90,000+ users (rather than plucking out a handful of semi-professionals)? For example, what if you paid for individual "alpha factors" rather than algos that employed many factors, across hundreds of stocks? It is just not clear how much value the crowd will add to the presumably standard Alpha Combination, Portfolio Construction, and Execution steps (and I suspect that in large trading "shops" these later steps have been reduced to practice, and the focus is on the earlier steps, in an attempt to keep the fund return on-track with a target).

Any thoughts on paying for "signals" versus paying for full-up soup-to-nuts algorithms?

^ great question Grant. Thanks for the context as well. Bump please anyone?

Can't users trade their own money with their algorithm?

Yes they can. Quantopian offers Interactive Brokers and Robinhood integration. That means you can Live Trade with your algorithm and money.