What would it take for you to invest real money with an algorithm?

The post "Testing on a larger scale" led me to create this thread. I'm wondering what others in the community would require of their algorithms to actually use them to invest significant sums. I'm kind of interested in specifics if possible along the lines of how many securities would an algo have to work for? Over what period? What kind of results? What amount of slippage (trading expenses) would you account for? Are you more comfortable with a broad ETF, sector ETFs? If you use individual stocks how many would you need to feel diversified? What kind of risk do you feel comfortable with? Do you lever or short? I'm trying to keep this general knowing that I come to the table with strong beliefs (actually fear and skepticism). Are you more comfortable with daily trading? Would you use minute to minute? Would you allow the computer to generate/place the trades without you? I'm not looking for anyone to answer all of these. Frankly I'm looking for some ideas. Also, this question relates to "significant sums". What I mean is what would it take for you to put enough of your capital at risk with an algorithm that a 35% drawdown would be uncomfortable?

2 responses

Regarding the money part, my understanding is that regulations require $25K minimum for active "day trading" with margin. There has been minimal feedback on this forum, but my personal sense is that a practical number is more like$100K minimum. The implication is that if you are a prudent investor and only committing ~10% of your net worth to high-rolling active trading, you need to be a millionaire to be in the game (and even at \$25K minimum, you need to have more accumulated/inherited wealth than most middle-class folk). --Grant

Thanks Anony...I haven't been able to put my finger on the Quantopian target market, but maybe there are more multi-millionaires wanting to code algorithms than I realize. --Grant