Can a Retail Trader Succeed at Algorithmic Trading? (Part 1)

I recently stumbled upon a thread on a prominent online forum that is roughly 18 months old. I started reading and realized I have some unique perspectives to share since I am actually ankle-deep in algo trading myself and have taken one of the courses discussed (see second-to-last paragraph here).

The reason I am responding here rather than in the forum itself is because the walls have ears. Internet forums and social media are primary vehicles for communication between retail traders, but vendors often frequent these sites as well. On multiple occasions, I have seen someone subscribed to a trading service get banned by the vendor for posting negative feedback in forums and social media. More details would probably be needed to determine whether this is legal (i.e. do they just get cut off once the subscription runs out? Are they banned immediately with pro rata reimbursement for what subscription remains?), but bottom line is that it happens.

Since I have been a customer—and a customer who does not like to burn bridges—I am keeping personal comments to my unmonetized, low-traffic blog rather than posting in the middle of Grand Central Station.

The thread begins:

     > KD, an (apparently) successful algorithmic trader/author claims simple strategy
     > works and will always work.
     >
     > EC, another guru in this field, however, says simple quant strategies don’t work
     > anymore and machine learning is a must if you want to succeed in trading. He also
     > says that it is impossible to do ML-based system trading on your own; you need a
     > team based approach, since it is so [labor] intensive…

Although I only tested ~300 simple strategies the KD way, none came close to working. Yes, he does teach the simpler the better, and the strategies he gives you as part of his course are simple themselves. Because I couldn’t find anything that met his criteria, though, I have to remain skeptical.

I like the EC comment about doing ML-based strategy development with other people. For multiple reasons, I totally believe trading strategy development should be done in groups (see last paragraph here).

The post continues:

     > I believe EC has gone on record saying the strategies in his book are old strategies
     > that don’t work for him anymore. I wouldn’t be surprised if KD did the same in his
     > book. Seems kind of silly to put strategies in your book you are still using. Both…

Right?! The post continues:

     > publications… are seminal works in retail algo trading. KD is one of the few people
     > with a verifiable record in a trading competition (though we sort of take his word
     > he did it algorithmically). I’d listen to what he has to say…

Interesting comments about KD’s credibility. Yes he was probably verifiable at one point. Is he now? We really don’t know. I’ve been writing on this topic going back many years.

I will continue next time.