The Gateway to Algorithmic and Automated Trading

Outside looking in

Published in Automated Trader Magazine Issue 29 Q2 2013

To outsiders, the algorithmic trading industry is a citadel - big, rich, and closed to tourists. Assembling the tools needed to get behind the walls is tough, laborious and time-consuming. So what are the prospects for interlopers to prise open a gap and get inside?

Outside looking in

Quantopian, a start-up that launched in January, believes it's possible. The theory: the interlopers just need someone to provide them with the right tools. The goal is to unleash the aspiring quant traders among the cohort of scientists, mathematicians and geeks who are not working in the finance industry now. Somewhere in that crowd, there should be ideas for brilliant algorithmic trading strategies.

Open-source software is already used widely by quants, but the professional trading industry has stopped short of sharing the tools they build with that software. If all goes according to Quantopian's plan, open-source tools could be disruptive for an industry that has been responsible for its own fair share of disruption. It could change the makeup - and the terms - of the quant labour pool and infuse the community with new styles of trading.

The venture has its sceptics, but a couple of big names have bought into the theory. Quantopian's backers include Getco, one of the world's largest automated traders, and Spark Capital, a venture capital firm that looks for investment in disruptive technologies. Past investments include Tumblr and Twitter.

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