“Why did I quit algorithmic trading for web startups?”: The story of a US developer

In our blogs on Habré and Geektimes, we write a lot about the stock market device, the technologies used on it, and also tell the stories of people who with varying degrees of success are engaged in investing on the stock exchange.

In the comments to these materials, we are sometimes accused of embellishing the situation and telling only “success stories”. Therefore, today we decided to talk about the real difficulties that await any IT specialist who decided to try his luck at the stock exchange.
')
To do this, we have prepared an adaptation of the post from the blog of Jason Roberstvo - an American developer who has been engaged in algorithmic trading for several years, but abandoned it for his own startup, having substantiated his choice in detail.

What gives algorithmic trading (except money)

Jason was actively engaged in the development of trading robots and algorithmic trading for about six years - from about 1999 to 2004, and in 2008. In his own words, he failed to earn a gigantic fortune and achieve significant success in this field.

Nevertheless, the entrepreneur and the developer said that during his trading time he was able to learn more about himself, work in the market and learned a lot - for example, writing reliable code in a situation where errors are very expensive.

For those who, like him at one time, want to try their hand at work on the stock exchange, the ex-trader told what they should expect.

Have to spend a lot of money, time and effort

Automated trading requires a large amount of resources - this includes money that needs to be deposited into the account, investments in software and hardware, time to develop, test strategies, and write and debug the code of the trading system.

According to Roberts, the development of web and mobile applications is far less resource-intensive.

Roberts notes the possible difficulties that may arise if a developer unfamiliar with the financial market decides to team up with an experienced trader, helping to program trading strategies. In his case, this approach did not work - the trading strategies created in this way did not work, even though Roberts' partner was a truly successful investor.

As a rule, the situation was such that Roberts had to spend a lot of time (up to a year or more) on the development of a modern trading platform, and later did not bring the expected profit. And you need to be prepared for this, since nobody gives guarantees in trading.

From the point of view of Roberts, it is much easier to create something that someone is willing to pay for right away, rather than trying to program a product that may be profitable in the future. Winning the market is possible, it just does not work for everyone, says Roberts.

Practices from the field of online trading is difficult to apply somewhere else

When you spend years developing an automated trading system (usually in an atmosphere of total secrecy), and it doesn't work at the end, it becomes difficult to apply the experience to something else. On the other hand, if you work on a web or mobile project, develop a professional blog or a podcast, the whole experience (when everyone knows what you are working on) can turn into a reputation creation, which, in turn, will open up unexpected opportunities. Jason Roberstv calls this phenomenon "an area of increasing luck."

When developing web and mobile applications, at least you are trying to do something valuable for the world, and not only for yourself.

“You can't spread bread on bread,” but other things being equal in a situation of financial losses from losses on the stock exchange or business crash, in the second case, an entrepreneur can say, “At least I tried to solve people's problems and make their lives easier.” The software created by a trader is most often used only by him, for many developers this is somehow depressing.

Features of finance: high stress and specific people

Trading is a constant stress from which even automatization does not save. Roberts says he read a scientific study that said that a losing trade harms the psyche twice as much as a good feeling of happiness brings.

Many of the founders of startups like to talk about how difficult it is to launch a project, that working on their business is like a roller coaster, but this does not compare with the level of stress and pressure experienced by traders.

In addition, at some point, Roberts realized that he liked communicating with financiers less than with programmers or start-up creators. Such people are rarely open and sociable, since there are all competitors in the market. At the same time, developers of trading systems do not always put money at the forefront - and this distinguishes them favorably from the creators of most IT start-ups.

And yet: it's hard to leave the stock exchange completely

In conclusion, it should be said that even despite the fact that Jason Roberts described in detail the drawbacks that he encountered in the process of doing algorithmic trading, he nevertheless said in his material that he did not want to completely abandon it.

If I make a fortune on startups, then it will be difficult for me to resist not trying my luck in algorithmic trading again.