We conclude our conversation with Maxim Zakharov - an algorithmic trading professional.
FirstSecond
Stock market loner lifestyle
- You are a member of the Algotrader Club?
- Not, i'm a loner. But we have a certain company, which used to periodically meet at Smartlab conferences, while they were. When will such communication resume, I guess, we will meet again.
- can be said, that algorithmic trading is a way of life for such a person, who lives where and how he wants, does not look at the market, nor analysts, does not listen to anyone and does not depend on anyone?
- Quite. I don't know at all, what is market analytics. I almost never follow, where is the market now relative to yesterday or relative to the morning. If we have any significant rise or fall, then I don't even know, it doesn't matter to me.
Maxim Zakharov Maxim Zakharov
Dice strategies
- What do you think, what is the future of the algorithmic trading industry in Russia?
– There will always be some niche for enthusiasts. However, if someone now decides to go solo in fast trading with a large number of transactions, unlikely to be able to. Because today the entry threshold is significantly higher, than before.
- Let's be specific. Here I am, for example, newbie and decided to get into algorithmic trading. What I need?
— Algorithmic trading is not always a server and a large number of transactions. It can be a regular computer, laptop or other gadget, algorithmic trading program, which is presented by the broker. In the same QUIK there are opportunities. Although I have never used them and do not even know, what is he capable of, but I know, that they are there. And every broker has a similar thing, which makes it easy to start. So elementary, that you don't even need to know programming. That is, from the cubes it is really possible to make some kind of strategy.
— The client can contact his manager and declare, what would you like to try, and he will be provided with software. But where to get historical data for testing?
- Usually, all of these algo trading applications have services for downloading and testing. But dont know, how high-quality they are.
- let's say, I downloaded all the data, defined a strategy for myself, folded it. I click the "test" button, complex tests and speaks: "Your strategy has shown the following result". I am either satisfied, either dissatisfied. If satisfied, what is the next step? How to roll out the system to the market?
- Usually, these complexes make it possible not only to test and program strategies, but they allow you to trade. They connect to the broker's account and, respectively, start to work.
- Anyone can try?
- Why not? If we take algorithmic trading as a spherical horse in a vacuum, then you can try.
- just for fun, mine is not mine.
- Yes. And money - to the minimum account.
- In any case, the main thing is practice.. If I downloaded and installed the software, tried some systems, then you have to go to the market, get used to and fill a bunch of cones! After all, nothing will teach, as the loss of the ruble.
- Certainly. theoretical education shouldn't last long. In parallel, you need to touch the real market, even with some minimal volumes with minimal deposits. That, what we model in any programs, especially without experience, may be drastically different from reality.. Undoubtedly, having experience, I can test something now and then it will work, but you have to come to this.
— Are there any risks to go into a margin call??
- Looking at what to trade. There are risks of leaving in a margin call. Although, usually, beginners are not allowed to trade instruments with high risks. But if they give, that is, the possibility of even leaving in the red. We have a history of a year ago and testifies to this, when the price of oil was negative. There are always risks. Especially in algorithmic trading, it's a soulless machine, which has a set of rules. And there's always a chance, that these rules will not be written clearly enough, wrong or something will be left out. So that robot can quickly go against you.
- Did this story touch you??
- Not, I always play it safe in this regard and have never found myself in such a situation. But when this happens in the market, I'm following this closely, because it, usually, good for me.
- high volatility, opportunity to earn.
- Yes. When someone breaks something, inefficiencies arise. I always look at it.
We should lay straws
— Let's compare the algorithmic trader and the investor. The investor has a portfolio, bringing money to the family in an understandable way. And the investor can calmly explain to relatives, Say, here is my stock portfolio, it received dividends, who got to such and such an account. Money can be taken, but knowledgeable people recommend not to touch the stock coming 50 years. Relatives understand and support him. The investor is fine: and family, and capital. How to be an algorithmic trader? That he has, except instruments: robots and systems? Yes, this is his business, who feeds the family. But can an algorithmic trader pass his business to his children?? Will he be able to explain, how everything works?
- hard to convey. If I stop dealing with my system, she will just stop, and nothing else will happen. It's unavoidable, when you deal with all aspects yourself.
- Then it makes sense to err? In addition to the business algorithmic trading, a portfolio should be formed for retirement plans or some other future happy life.
- Undoubtedly, It makes sense. If we only depend on algo trading, and something happens to her, then in life there is a "drawdown". And if we diversify into algorithmic trading, investment and more, then even if our algorithmic trading dies off, there are other tools for making money. Diversification is good in any activity.
- Let's return to the prospects for the development of the algorithm market. More newcomers and more software. Try yourself easily. Market as a whole, You said, goes to large institutional players, who spend capital on the structure, machinery. It turns out, these players also reduce their profitability. They already think, do they need it all?.
— If you look at the prospect of markets in general, it's hard to predict, What will happen. Because markets become efficient. If this situation is extrapolated and hypertrophied, then we have a market, consisting of one line. An event occurs - a step appears up or down. And then the straight line again. In some kind of singularity, we will come to this someday. But now we're on our way, while such volatility occurs.
Less timeframe - more secrets
— You are an algorithmic trader with such a great experience and your understanding of the market development prospects. Your next step? How do you see your future on the stock exchange??
- Here are some options.. The emergence of strategies is possible, similar to investment, which do not involve a large number of transactions. And the fast-trading part, Most likely, will die sooner or later. It's only a matter of time.
- No chivalry like "I will be to the last"?
- I will stay until the end, This is clear. But sooner or later the commission will eat up all the profits.
- Means, now a beginner should not seriously consider a career in algorithmic trading?
- Not certainly in that way. It makes sense to do it, if he likes, and then he will go to work in a big company or team. It can take place in algorithmic trading, if only part of something bigger.
- Maksim, Do you need any special character traits?, to be an algorithmic trader, the more successful?
- I think, need a technical mind, aptitude for mathematics and programming, Perseverance. A person must immerse himself in the process of work, talking for hours only with a computer and programs.
How long does it take to create one robot? That, say, came up with an idea - and now he trades?
- It's different. Something is hatched for months, and something is born literally in one day.
But it works anyway?
- Not, most ideas don't work. Same with implementation.. If there is some tricky idea, requiring tricky data and tricky calculations (which do not exist yet!), it takes a lot of preparation. What if the data is already there?, but you just need to somehow interpret them differently, then it can be done quickly.
— How own idea, implemented in the form of robots or a group of robots, protected by algorithmic traders? Do they talk openly to each other, how and what did you come up with? Or don't share secrets?
- The shorter the timeframe, the more secrets. In man, weekly chart trader almost never has secrets. But here people, who do HFT, it's always a secret.
It's not even polite to ask?
- Yes. Before, when we talked with colleagues, there was even some kind of “sport” - you had to manage to ask a question like that, to get valuable information and at the same time not reveal anything about your strategy.
Oil futures
- What stock exchange instrument could you compare your own rhythm of life? For example, i bond, I'm calm. Or oil futures.
- Need to think. Oil futures, may be, Yes. He is quite calm.. But there are external circumstances, bringing him into some kind of movement or excitement. Then he starts to move more actively. Then it calms down again, everything is fine again.
— How others react to sharp changes in the rate of your oil futures?
- Surrounding me for a long time, so they are used to everything. Moreover, there is nothing wrong. There are no such things, with which to fight or endure. Speech, rather, about inner feeling, than about some external manifestations. I try to work calmly. So, to always be in some kind of movement, but no kinks. You can quickly burn out.
How do you manage to not burn out for so many years?? You also need to be able to take a break from trading?
- The main thing is to do, what do you like. Come on and leave work at work.
- Preference for physical activity?
- Without physical activity, the programmer is just a disaster. Because work involves constant sitting. So in a few years you can get a bunch of sores. And plus, physical activity, even in terms of productivity, has a good effect on the brain..
- And there are favorites Books trading?
— For all the time I can’t single out anything from the subject of trading, because I never got into it.. At first I read. But then, when I started to delve into the topic, understood: all, what i read, all these ideas are not about that, what I do. So all this literature passed by.
- I didn't want to write my own book.?
- Not. All, what i would like to say, already written in Ayn Rand's book "Atlas Shrugged". There is a lot of controversy about this novel., discussing his social side. But I liked it in terms of personal effectiveness. Principle, which the protagonists profess: if you do something, then do it well - it turned out to be close to me.
- It's in tune with what you're doing, because you are in complete control of your destiny. What do you think about neural networks and how do you see them in the future?
— Neural networks are the future. That's all, related to selection, learning and searching. They are the most effective on the stock exchange in the broad sense of the word.. Therefore, any things, associated with various optimizations, will sooner or later consist only of neural networks. And the gradual efficiency of the market is precisely due to the fact, that neural networks come. Because they see patterns, which one will never notice, and quickly respond to them and adapt to them.
— And what would be your parting words to a novice trader??
— People, coming to market, I want to say, in general, algorithmic trading and trading should be taken seriously and dealt with with full dedication. Because the survival rate in this area is very low. It is better to consider securities and that's it, what is connected with them, how investing, passive income. But I would not advise actively engaging in algorithmic trading and trading.
- Or if you do…
— …then become a professional in this field and be part of a large team. But then your success will depend not only on your contribution, but from the whole team.
