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Starting with not so much $

Hi I'm new to the world of Algorithmic Trading and Quantopian. I'm a computer science student so I am comfortable with python and the programming portion of algorithmic trading but I don't have that much $. I was wondering if anyone knows specific strategies or algorithms that are effective with an initial investment of $1000. I'm already set up with a brokerage so I don't need to spend $ on an initial deposit and transaction fees are about $6.95. Any recommendations would be awesome. Thanks

12 responses

If you are starting before you get into what strategies, in my opinion you need to know yourself on what kind of investor you are everybody that are young would said that they are ok with an aggressive approach the reality is that even when they see in the account 5% having big money would hurt. And what you need to learn is the discipline to follow your own strategies. Read couple books of investing like Reminiscences of a Stock Operator or other books for Value investment. I personally like ETFs and Dividend Growth strategies. If you have little money you might want to start using robinhood.com they dont charge comissions. Interactive Brokers would start with an IRA (starting from $5,500) if you live in America.

Regards,
Erick Gomez

Hi,

I am also a student with extremely limited capital... so, I know how you feel... If you have a brokerage account that charges 6.95 $ per trade, I guess that is not IB, and it would not work with Quantopian.... it is difficult to make a profit with that kind of commission if your initial capital is 1000 $ because whatever profit you get, ( assuming you make profit in the first place) would be swallowed by brokers... You should either change the brokers or start with value investing while exploring quantitative trading strategies on Quantopian....

Oops I didn't realize that Quantopian only works with IB. I've been waiting on early access from Robinhood. I'll keep exploring on Quantopian and do the trades manually for now. Thanks!

With a very small amount of initial capital, and the willingness to lose it all (if you're trading it, actively, you will most definitely lose it all), you could try FX. With FX you can get 20x to 50x leverage. And if you're careful, and diligent about avoiding emotional moments of conviction, you might get lucky and survive for a month or three. Otherwise, you would have to trade penny stocks to get the returns high enough to balance out the commissions.

Here's a comprehensive list of FX brokers: http://www.myfxbook.com/forex-broker-spreads

Until you've got at least $5,000 you're willing to lose, paper trade to learn how it works (and also what styles of trading are comfortable for you). And get a real brokerage platform. While the FX point might be valid, beware of brokers who don't give you the option to do it on commission, where you're actually trading against the market and not the broker itself. Read up on it.

Generally, without a daily hands-on mentor, this takes a few years to get the hang of....

Buy 4 bitcoins and sit on them until 2020.

Spend the time waiting diligently clicking the "backtest" button 7 days a week between code tweaks until you can come up w/ $10k to play with on a strategy you've built yourself.

0.695% per trade will eat you alive.

I think another answer is "enter the contest." If you can't use your capital, then you should use ours. Read about the contest, and see the money flowing on the winners page.

Disclaimer

The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by Quantopian. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as none of Quantopian nor any of its affiliates is undertaking to provide investment advice, act as an adviser to any plan or entity subject to the Employee Retirement Income Security Act of 1974, as amended, individual retirement account or individual retirement annuity, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement or other investor, contact your financial advisor or other fiduciary unrelated to Quantopian about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal. Quantopian makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances.

You could consider setting up a Quantopian algo coding service. Say, $N up front and $N upon delivery of the code (with N determined by the scope, e.g. anticipated lines of code). If you build up a reputation, then maybe Quantopian would even refer people to you. My hunch is that folks might pay up $50-$500 for a basic algo to get them up and running (to which they could then add their "secret sauce"). --Grant

I am also new here, but I have used ThinkorSwim "TOS" (I trade options) so that may be a way for those with limited capital to start off. I am not sure if quantopian do options, seems to be just stocks?

A few additional notes on this topic.

First off, here's a notion that Quantopian might entertain:

Proprietary Trading Group Separate Trading Limit (STL) Account a PDF.

"IB Proprietary Trading Group Separate Trading Limit (STL) Account Master User. Proprietary Trading Group accounts provide institutions with the flexibility of trade execution, clearing and prime broker services all within the same account. As the Master user in an STL account, you set up individual accounts for traders or strategies with separate credit limits."

Perhaps the Q could create an STL type account and allow funding challenged quants to deposit smaller amounts of capital into individual subaccounts within the STL. The Q would manage these accounts just as a prop-shop might do, as separate accounts with their own restrictions and boundaries. I'm not sure of the legal status of such a setup, but it appears the trading infrastructure is in place to handle that side of things. The representation and tax side of things -- probably a stickywicket there.

Secondly, it appears that there are reduced account minimums for alternate account types: straight from IB site: Required minimums

Category Required Deposit  
Individual Accts (unless listed below)  USD 10,000 (or non-USD equivalent)  
Trading Group Masters                   USD 10,000 (or non-USD equivalent)  
Broker Masters                          USD 10,000 (or non-USD equivalent)  
Indian residents 2 trading with an IB India account INR deposits only, equivalent to USD 2,000  
Indian residents 2 trading with an IBLLC-US account USD 5,000 (or non-USD equivalent)  
IRAs 3                                  USD 5,000 (or non-USD equivalent)  
Individuals age 25 or younger           USD 3,000 (or non-USD equivalent)  
Advisor and Broker Clients              USD 5,000 (or non-USD equivalent)  

I just published a Python package that will allow you to make commission-free algorithmic trades using Robinhood's API: https://github.com/benkroop/robinhood

You don't need beta API access to use this. This package uses the same API endpoints the phone app uses and authenticates using your normal username and password.

Edit2: Looks like this probably won't work with zipline, but there are other open source packages out there that can run real-time stock trading algorithms.

Although this doesn't work inside of Quantopian, you may be able to live trade your Quantopian algorithms on Robinhood using Quantopian's Zipline library, which you can use to to run your algorithms on your local machine: https://github.com/quantopian/zipline

If it works, I'm planning to write up a tutorial in the next day or two explaining how to run your algorithm with commission-free trades on Robinhood using Quantopian/Zipline

Let me know if you have any feedback or feature requests!

Edit: Testing compatibility now

We're happy to announce a formal integration between Quantopian and Robinhood is live and ready to be used:

See this fresh forum thread: https://www.quantopian.com/posts/zero-commission-algorithmic-trading-robinhood-and-quantopian
Other information: https://www.quantopian.com/robinhood

Disclaimer

The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by Quantopian. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as none of Quantopian nor any of its affiliates is undertaking to provide investment advice, act as an adviser to any plan or entity subject to the Employee Retirement Income Security Act of 1974, as amended, individual retirement account or individual retirement annuity, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement or other investor, contact your financial advisor or other fiduciary unrelated to Quantopian about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal. Quantopian makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances.