At the Crossroads: AlgoTrader or Not

I have always loved math  & computer programming, since my early teens. However, putting these skills together to make money is quite hard. A few days ago, when I was trying to raise money for a gaming product that I was building, I came across something called 'Algorithmic Trading'. In fact, I heard about it from one of the potential investors. After doing a bit of online research, I was fascinated. The idea that you can have an automated bot trade on your behalf while you sit on a beach , enjoying a Long Island Ice Tea, all the time getting richer, was the visual I had. Haha! Well, I do not want to mislead anyone, but that was kind of my inspiration.

The icing on the cake is the fact that this field lies, right in the intersection of my math and programming interests. I neither have a Finance nor a Programming education, so this makes it difficult, but on the other hand, it should add some adventure to a mundane COVID induced lock down boredom! 

Taking a call to pursue Algorithmic Trading, even as a part time hobby is not a small decision as it is quite involved. One needs to evaluate the effort to ROI ratio. That's a good start perhaps. The intuition of a Sharpe ratio, so widely used in trading is quite similar. Felt like I was subconsciously easing into Algo Trading. So, how much risk am I taking, and are the rewards worth it? 

People on multiple forums say that, trading is not exactly gambling. The odds of winning are more than 50:50. Now, that sounds encouraging. But it begs the question - then why don't more people do this? Moreover, I still haven't seen a scientific paper, making a compelling case about algo trading. There are reasons for all this, which I will explain in future posts. To sum up, a major downside to this area is that there is a lot of uncertainty on whether it really works and that is a big barrier to entry for many folks, as there is real money involved.

The biggest positive is that I get to spend my free time doing something enjoyable and I learn something new. This path can lead me to other ideas as well. Who knows? I think it would be time well spent, though I cannot put a tangible dollar value on this benefit.

Well, at this moment, I would like to stop introspecting and show some bias for action. The pros and cons list will remain small and I will not resort to 'Analysis Paralysis'. I have decided the pros trump the cons and I am in.