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Below are some common questions about algorithmic trading

What software packages do I need?

  • The concept is global and not restricted to any software. The software packages mentioned in the course are only tools that speed up the process of applying the concept. I am sure in the future, better tools will come by, and you can pick up the new tools and apply same concepts again.

  • StrategyQuant with coupon code

  • MetaTrader (free)

  • TradeStation or Multichart

  • Python platform like quantopian

How much capital is needed to start trading?

There is no perfect number to start with. Obviously the more capitalized you are the better it is. Having said that, below are some guidelines of what to trade based on your capital:

  • For accounts < $5,000 trade currency micro lots

  • For accounts < $10,000 trade “cheap” futures like Russel emini single strategy or multiple currency mini lots

  • For accounts < $20,000 trade 2-4 strategies on “cheap” futures markets

  • For accounts > $20,000 you can custom build futures portfolios to match your capital

If I apply what I learn correctly, how much money can I expect to make?

Trading is not like a job with a salary at the end of the month. still you can make good money assuming you are armed with the right knowledge and discipline:

  • It will depends on the risk you take and capital you trade. Generally it is easy to double your account when it is small and make decent double digits when you capital is large.

  • Keep in mind that not everyone is capable of pulling the same numbers even with the same methodology, systems, timeframes, etc. because of the risk tolerance and their psychological build to keep marching during drawdowns and follow their systems.

  • Don’t think that you need huge returns to make millions. Check the chart below to see what is possible.

Are the concepts you teach applicable to other financial instruments?

  • The concepts are not attached to any financial instrument, nor it is attached to any software, but software tools make the process a lot more faster and practical to execute.
  • While all financial instruments can be traded, some instruments carry more risk than others. CFD’s and Spot Forex are dangerous. While some reputable brokers are ok, but even then you have to be careful, because basically you are trading against your broker, and since they have all the control you will always end up on the short side of the stick.
  • On the other side, Stocks, Bonds, ETF’s, Futures are all traded on a regulated exchange and all your trading goes against all participants in the market.

Can I trade part time and keep my job?

  • Of course you can. In fact it is better to keep your job and start small to control your emotions and get your feet we and once you are successful then you start to grow your account. Once you have enough money to live off for a year and decent account to trade then you might think to quit your job.
  • The idea is not put so much pressure on your trading account to pay for your expenses, while you are still not consistently profitable and while the account is so small.
  • If your expenses are $5,000 per month, and your trading account is $50,000, then you will need to make 10% per month, every month and that is just crazy to ask of your algo's. So keep it real and build your account until your yearly expenses is 10%-15% of your trading capital.
  • All the above assuming you have proved to your self that you are a consistent successful trader.

I am new to trading and know nothing about programming. Will I be able to trade successfully?

  • Yes, there is no need to learn to program, you can still trade without it. I think the following analogy will shed more light:
  • Have you ever built a website with Squarespace or Wix, it is very easy to pick up, but you won’t be able to achieve what a designer who is expert in CSS or HTML. Both of you will have a website, but with different performance.
  • Every year, more and more software tools are coming to market to make more tasks easier than before, research much more powerful, hard concepts are easier to impliment.

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