Discussion in 'Automated Trading' started by caementarius, Mar 8, 2011.

  1. Has anyone had any experience with AlgoDeal?

    In the least, it might be interesting to use for testing whether you deploy with them or not. I'd be interested to know more from someone who has experience with them.

    How much capital do they have access to?

    How are the deals structured? (beyond the blanket 10% of profit they describe)
  2. Inane business plan. Great for them and shitty for you.

    If you have an algo that can produce, why use their investors' money to earn a paltry 10% when you can raise money at better terms?

    They are basically riding on your coattails to scalp a fee from their investors. They are middelmen who add no value. Then you have the language barrier, too, if you don't speak French.
  3. Worse, they require full exposure of the strategy (and the code) and there is no method for preventing the continued use once the "contract" expires. All that for 10%?
    Absolutely the most ridiculous deal out there.
  4. Ya I looked at their site last summer... the above comments are all correct.

    Lots of free money chasing the markets, but funnily enough, no money is chasing the strategies... kind of ironic.
  5. maxdama


    I've used AlgoDeal a little bit. Their backtester is free and has a lot of data available. It's easy to use but also pretty powerful.
  6. elefevre


    First, a disclosure: I am a software developer with Algodeal.

    The idea is that we are planning to discuss capital with our investor on a per-strategy basis. Capital will also vary during the life of the strategy, typically lower at the beginning, then maybe 5x higher 6 months later, then maybe 5x higher again after 6 more months (depending on the returns, obviously).

    It is difficult to give a definitive number, but our investor has significant capital and would not be interested in strategies that have a capacity of less than several millions.

    An important thing is that the investor is taking all the risks. That is, if the strategy loses money, the strategy author will not lose a dime.
    That is why we require the code of the strategy. It is too easy to overfit during backtesting. We've learnt that reading the code is the only way to know for sure whether the strategy is based on sound principles (and, sadly, we've also learnt by reading source code that the vast majority of strategies submitted to us that look good on paper -- that is, that have good metrics -- are actually dreadful).

    I should also point out that we've also learnt that quants need help programming their strategies after they've managed to demonstrate their point. So, once we've entered into a more formal relationship, lots of energy on our side is spent making the strategy code faster, more maintainable, and more resilient.

    Now... "you have the language barrier, too, if you don't speak French"?! That's a new one. I'm curious to hear how anything on our website make @rolextrader think that we would have any trouble speaking English. Many of us have been (or are still) living in English-speaking countries. Or, as a matter of fact, *are* from an English-speaking country.

    OK, this reply is getting quite long. Let me summarize with this. We provide the following things:
    • a platform for backtesting
    • a platform for live execution
    • a backoffice
    • a legal framework
    • access to significant capital
    • no risk
    If you have all this, then you do not need us. If you only need some of these things, then we can talk too, provided you are willing to take some risk yourselves (many of our deals have been custom ones).
    And, in the end, if you just want to use our platform for free, then you are welcome to do so.

    I hope this clarified things a little.
  7. I suspect, as you all have pointed out, the issue comes down to trust, deal specifics, and how much money they are able to bring in.

    I'm sure money can be raised with better terms. However, taking care of the testing and execution infrastructure isn't worthless (if it is in fact a good platform).

    I've started to look at system development more as something where your best effort is to test as many sound and unique ideas as you can in as short a time as possible. Speed is life.

    If you are going to come up with 20 tradeable strategies in a 5 year period (after testing many hundreds?), then is it the end of the world if you get a "bad deal" on the first few?

    If you were a quant fund making 2&20 and let's say you got $1M to manage, what are the chances you'd spend 50% of your take on IT infrastructure etc. Not to mention what you would spend if your system doesn't profit.

    I would worry about the language barrier and the complications of an international relationship if there were some kind of dispute. A fair number of cons here.
  8. Thanks, elefevre.

    It didn't take long to install eclipse and submit examples for testing. So far, I'm impressed.

    It looks like there is a way to use local .csv data without submitting the strategy. I am not certain yet as I am still getting my bearings.
  9. elefevre


    Indeed. In fact, we expect that most people will first code and debug their strategy locally before submitting them (debugging remotely is not easy).
    Open a strategy, then click the little arrow next to the Run button (green arrow at the top). Select "Run Strategy Local".
  10. The deal still sucks, your explanation notwithstanding. Here's why: An investor usually pays a hedge fund 2/20 all the while the investor is at risk. The investor is not privy to details behind the trades, simply the global view of the system.

    Then there is the issue of jurisdiction and enforcement in the absence of a binding agreement if you guys rip off the code. it's a financial nightmare to come after a French company.

    Bottom Line: Only a fool would give an internet vendor his source code for a measly 10% even if the vendor was his next door neighbor. This sounds like a scheme to find a sucker who has profitable code and have it snaked away from a bunch of strangers offshore.
    #10     Mar 9, 2011