QuantConnect – where cloud computing meets open data for Algorithm Trading.

QuantConnect, a radical FinTech open data trading startup was established In 2011 with an ambitious goal: offer open trading data algorithm technology to mainstream audiences. QuantConnect follows the concept of open data philosophies that data should be freely available to use and republish as necessary, without restrictions from copyright, patents or other mechanisms of control. The founders aim to empower the general public with powerful tools to make trading and investment accessible through advanced technology to general audiences.

Jared Broad, QuantConnect co-founder and CEO won a Start Up Chile grant In 2011 and since that was invited to the TEDx Wall Street event and Battle of the Quants in New York (April 2012). In this last conference founded focusing exclusively on the growing quantitative hedge fund community and industry, by the hedge fund visionary Bartt C. Kellerman’s Global Capital Acquisition in 2006, Jared has been displaying his vision of a further advanced trading platform that can push the boundaries of algorithm trading, using the most advanced technologies to offer open data.

QuantConnect, offering: Equity, FX tick, Earning predictions, and Twitter Sentiment Analysis

Offering US equities tick data going back to January 1998, and updated daily with latest market data QuantConnect displays over 16,000 stocks, in an open library of data provided by QuantQuote. Besides this it offers an impressive FX tick data on 13 major currency pairs going back to April 2007, and updated daily with most recent market provided by FXCM.

With another deal with Estimize QuantConnect provides quarterly earnings predictions generated by a community of 13,000 traders and investors. Through the data from Estimize that goes back early 2011 and covers most stocks QuantConnect manages an impressive better than most of Wall Street’s predictions, such as 69% of the time better performance!

Last but not least through a partnership with StockPulse QuantConnect provides Twitter Sentiment Analysis to identify the most relevant capital market moods, rumors, and market-moving trends with it offering a valuable array of trading ideas and signals on every traded asset in the world.

QuantConnect startup seeded in Chile and New York

QuantConnect is a new trading and investment cloud-based algorithm service and community startup that was seeded between Chile and New York. The company aims to level the playing field for independent traders by providing the right technology tools to design and execute present and future proof trading strategies, and back-test their programs using historical market data.

The project is the brainchild of Jared Broad, serial entrepreneur born in New Zealand, founder of automated trading firm Stocktrack.org, and Shai Rosen, founder of Chilean auction website Ganeselo.com.

The service has been in the beta-testing stage for the past year with programmers including graduate students interested in pursuing a career in quant trading, and computer scientists from leading financial firms. The firm has been working quite hard in its disruptive strategy and has signed up thousand of prospective clients in its community platform and raise its profile at conferences such as Finovate in London and TechCrunch in San Francisco. During the process the firm has been creating an unique space in the algorithm trading industry, including the respect and support of employees of Google and Facebook. Tshe recent partnership with high profile trading global players such as FXCM and tech innovators such as Estimize and StockPulse gives them an unique outstanding spot.

The Plan

Looking further ahead, the firm has plans to set up a hedge fund based around the most successful managers, marketing individual strategies to retail investors via online brokerages, and packaging the best algorithms as an exchange-traded fund.

Although QuantConnect appears to have first-mover advantage in what could be a very lucrative market, they have at least one potential competitor in the form of Quantopian, which is working on a similar offering. The Boston-based technology shop has the backing of VC investor Spark Capital and high-frequency market maker Getco.

The Technical Nitty-Gritty

Unlike MT4, which uses the proprietary MQL4 programming language for its algorithms, Quantconnect uses the C# programming language, a general-purpose object-oriented language derived from the popular C/C+/C++ family of languages. Programmers can design and back-test their strategies for free, using vast cloud computing power leased from Amazon.com, and will only be charged when they want to make trades with their strategies by setting up trading accounts.

Instant access to this massive computing power means that a simulation based on 30 stocks in the Dow Jones Industrial Average could be run in a matter of minutes. By comparison, the same calculations on the average desktop computer would take several days to compute.

Applying principles of openness and transparency in all aspects QuantConnect is creating a spot in a high competitive and disruptive part of the global financial and trading world. For that QuantConnect defines themselves as an innovative company giving any advanced algorithm trader or a complete access to an enormous library of financial and capital markets data, thanks to a generous network of data partners for providing the right resources.

quantconnect.com/
twitter.com/QuantConnect

Market Place

MKTPlace is a leading digital and social media platform for traders and investors. MKTPlace offers premiere resources for trading and investing education, digital resources for personal finance, news about IoT, AI, Blockchain, Business, market analysis and education resources and guides.

Wall Street, along with the financial centres in London and Hong Kong, have become algorithm trading hubs where thousands of traders employ sophisticated algorithm programs to gauge the market trends and rely on the analytical superiority of these high powered super computer programs. Algorithm trading is carried out by mathematical robots and big data crawlers that still few people actually know about.

Believe it or not, algorithm trading is now done all over the globe which has led to the emergence of a new technological trend in financial industries of several developed nations. You have to admit that at times people fail to predict market volatilities, the bull and bear trends and a number of factors, which algorithm systems never overlook.

What is Algorithm Trading?

At its core, algorithm trading, which can also be referred to as high frequency or HF trading, is a trading process which is conducted by highly sophisticated computer programs. These programs determine various aspects of a trade, which include critical decisions like timing, trends and prices in the market and the all the factors associated with these factors that can either affect them positively or negatively.  These programs are also designed to function independently, which means they can if they choose to, execute an entire trade order without consulting the trader.

Who Uses Algorithm Trading Strategies?

High frequency or algorithm trading is most commonly conducted by traders belonging to mutual and pension funds and in some cases, institutional traders who aim to break down a big trade into smaller chunks solely to manage the impact and risks caused by it in the market. Algorithm systems are complex and are not meant for every trader. These programs are designed to search for crucial trading factors like the ups and downs in interest rates, minor fluctuation in the economy, important news and notification and a number other intricacies.

They look for areas where they can mark an existing opportunity that is before anyone else can mark them. The algorithm systems which are employed in today’s trading practices have the ability to disperse massive trading orders into manageable pieces so they could be used in a multitude of regions across the world and at a speed which will remain unmatched.

Why Use Algorithm Trading?

The central purpose of HF or algorithm trading is to reduce the risk involved in a trade as much as possible. They present traders with smaller deals which allow them to enter and exit the markets faster than any other trader, also allowing the HF trader to switch between different trading platforms and exchanges.

Moreover, all financial markets are now operated by various sophisticated and overly complex trading technologies which have given a considerable edge to most traders. At the moment in the financial markets, top companies like Goldman Sachs, Morgan Stanley, and Citi, along with Barclays have been using some complex computer programs and big data programming in the Forex markets, which are responsible for a majority of trading in worldwide markets.

75% of All World Trading Is Done Through Algorithms

According to statistics and analytical research done on high frequency trading, it has been identified that algorithm trading now accounts for 75% of all trading done in the world. And not only that, it was also discovered that market trends are established through not just the macroeconomic factors or data but they are also determined by the traders who vigorously compete against each other to see who comes out on top in terms of the fastest information processing and the most analytical business minds. These are backed by big numbers in financial algorithms which have the ability to evaluate massive amounts of data to determine top profits margins.

Algorithm Trading & the Forex Markets

Some of the best algorithm traders in the Forex market are interbank traders who have been incorporating algorithm trading for the past couple of years. However, it is important to realize that algorithm trading has not yet put most independent trades at a disadvantage because most traders are focused on the long-term and upon witnessing the increased liquidity in the financial markets along with stability in share prices, a majority of independent traders are now seeking to integrate their trading styles and strategies with algorithm trading techniques and technologies.

Forms of High Frequency Traders

There are varying forms of algorithm traders. There are many HF traders who are referred to as market swingers and employ trading strategies to trade mostly on signals to create a market through the provision of securities on every side of the buy and sell trade order.

Other algorithm traders use high frequency systems to try and get a fix on where the markets are headed in the short run. Irrespective of the trading strategies these HF traders use and implement, they all aim at one thing only: making massive amounts of money without increasing the risk involved in their trades.

In the past five years alone, there has been a considerable rise in the number of traders using algorithm trading systems and according to a statistical analysis report published by the Aite Group LLC, a Boston based firm, it was identified that a third of all trades that were conducted in Europe and the US in 2006 were carried forward through algorithmic programs. Keeping this number in mind, you can say that 2% of 20,000 US companies use algorithm trading, especially in the equity markets.

Matthew Rothman, an analyst at Barclays Capital, had this to say,

“Five years ago, ‘high-frequency’ traders, and few others considered the funds more than a niche strategy. However, the niche’s role now overshadows that of mainstream brokers mutual funds and hedge funds.”

All in all, it is safe to assume there is going to be a big change in trading trends now that most independent investors and traders have seen what algorithm trading can do for them. And the sole reason for its increase in popularity is its potential for making huge profits while minimizing risk.

Market Place

MKTPlace is a leading digital and social media platform for traders and investors. MKTPlace offers premiere resources for trading and investing education, digital resources for personal finance, news about IoT, AI, Blockchain, Business, market analysis and education resources and guides.