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No hedge fund registered before the last 2 weeks will use Llama3 for their "prod work" beyond "experiments". Quant trading is about "going fast" or "being supe

No hedge fund registered before the last 2 weeks will use Llama3 for their "prod work" beyond "experiments". Quant trading is about "going fast" or "being super right", so either you'd need to be sitting on some huge llama.cpp/transformer improvement (possible but unlikely) or its more likely just some boring math applied faster than others. Even if they are using a "LLM", they wont tell you or even hint at it - "efficient market" n all that. Remember all quants need to be "the smartest in the world" or their whole industry falls apart, wait till you find out its all "high school math" based on algo's largely derived 30/40 years ago (okay not as true for "quants" but most "trading" isn't as complex as they'd like you/us to believe).

qeternity 2y ago
It’s impressive how incorrect so much of this information is. High frequency trading is about going fast. There is a huge mid and low freq quant industry. Also most quant strategies are absolutely not about being “super right”…that would be the province of concentrated discretionary strategies. Quant is almost always about being slightly more right than wrong but at large scale. What algos are you referring to derived 30 or 40 years ago? Do you understand the decay for a typical strategy? None of this makes any sense.
- posting_mess 2y ago
  Quantitative trading is simply the act of trading on data, fast or slowly, but I'll grant you for the more sophisticated audience there is a nuance between "HFT" and "Quant" trading. To be "super right" you just have to make money over a timeline, you set, according to your own models. If I choose a 5 year timeline for a portfolio, I just have to show my portfolio outperforming "your preferred index here" over that timeline - simple (kind of, I ignore other metrics than "make me money" here). Depending on what your trading will depend on which algo's you will use, the way to calculate the price of an Option/Derivative hasn't changed in my understanding for 20/30 years - how fast you can calculate, forecast, and trade on that information has. My statement wont hold true in a conversation with an "investing legend", but to the audiance who asks "do you use llama3" its clearly an appropriate response.
  - mathematicaster 2y ago
    > how fast you can calculate , forecast, and trade on that information has. How you can calculate fast, forecast, and trade on that information has There. Fixed it for you. ;)
  - chollida1 2y ago
    > the way to calculate the price of an Option/Derivative hasn't changed in my understanding for 20/30 years That’s not true. It is true that the black scholes model was found in the 70s but since then you have - stochastic vol models - jump diffusion -local vol or Dupire models - levy process - binomial pricing models all came well After the initial model was derived. Also a lot of work in how to calculate vols or prices far faster has happened. The industry has definitely changed a lot in the past 20 years.
    - richrichie 2y ago
      Very few of the fancy models are actually used. Dupire's non parametric model has been the industrial work horse for a long time. Heston like SV's and Jump diffusions promised a lot and did not work in practice (calibration, stability issues). Some form of local stochastic models get used for certain products. In general, it is safe to say that Black-Scholes and its deterministic extension local vol have held up well.
      - FabHK 2y ago
        Not only that, but Dupire’s local vol, stochastic vol (Heston in rates, or on the equity side models that combine local vol with a stoch vol component to calibrate to implied vols perfectly) and jump diffusion were basically in production 15 years ago. Since the GFC it’s not about crazy new products (on derivatives desks), but it’s about getting discounting/funding rates precisely right (depending on counterparty, collateral and netting agreements, onshore/offshore, etc), and about compliance and reporting.
  - deleted 2y ago
    [deleted]
  - 2y ago
- Jerrrrry 2y ago
  Leveraging "hidden" risk/reward asymmetries is another avenue completely that applies to both quant/HFT, adding a dimension that turns this into a pretty complex spectrum with plenty of opportunities. The old joke of two economists ignoring a possible $100 bill on the sidewalk is an ironic adage. There are hundreds of bills on the sidewalk, the real problem is prioritizing which bills to pick up before the 50mph steamroller blindsides those courageous enough to dare play.
- hattmall 2y ago
  Algo trading is certainly about speed too though, but it's not HFT which is literally only a out speed and scalping spreads. It's about the speed of recognizing trends and reacting too them before everyone else realizes the same trend and thus altering the trend. It's a lot like quantum mechanics or whatever it is that makes the observation of a photon changes. Except with the caveat that the first to recognize the trend can direct it's change (for profit).
  - deleted 2y ago
    [deleted]
creativeSlumber 2y ago
Is there any learning resources that you know of?
Izkata 2y ago
> but most "trading" isn't as complex as they'd like you/us to believe I know nothing about this world, but with things like "doctor rediscovers integration" I can't help but wonder if it's not deception but ignorance - that they think it really is where math complexity tops out at.
- posting_mess 2y ago
  They hire people who know that maths doesn't "top out here", so they can point to them and say "look at that mathematicians/physicists/engineers/PHD's we employ - your $20Bn is safe here". Hedge funds aren't run by idiots, just a different kind of "smart" to an engineer. The engineers are are incredibly smart people, and so the bots are "incredibly smart" but "finance" is criticised by "true academics" because finance is where brains go to die. To use popular science "the three body problem" is much harder than "arb trade $10M profitably for a nice life in NYC", you just get paid less for solving the former.
  - flourpower471 2y ago
    It is just a different (applied) discipline. It's like math v engineering - you can come up with some beautiful pde theory to describe this column in a building will bend under dynamic load and use it to figure out exactly the proportions. But engineering is about figuring out "just make its ratio of width to height greater than x" Because the goal is different - it's not about coming up with the most pleasing description or finding the most accurate model of something. It's about making stuff in the real world in a practical, reliable way. The three body problem is also harder than running experiments in the LHC or analysing Hubble data or treating sick kids or building roads or running a business. Anybody who says that finance is where brains go to die might do well to look in the mirror at their own brain. There are difficult challenges for smart people in basically every industry - anybody suggesting that people not working in academia are in some way stupider should probably reconsider the quality of their own brain. There are many many reasons to dislike finance. That it is somehow pedestrian or for the less clever people is not true. Nobody who espouses the points you've made has ever put their money where there mouth is. Why not start a firm, making a billion dollars a year because you're so smart and fund fusion research with it? Because it's obviously way more difficult than they make out.
flourpower471 2y ago
Well I work in prop trading and have only ever worked for prop firms- our firm trades it's own capital and distributes it to the owners and us under profit share agreements - so we have no incentive to sell ourselves as any smarter than the reality. Saying it's all high school math is a bit of a loaded phrase. "High school math" incorporates basically all practical computer science and machine learning and statistics. If I suspect you could probably build a particle accelerator without using more math than a bit of calculus - that doesn't make it easy or simple to build one. Very few people I've worked with have ever said they are doing cutting edge math - it's more like scientific research . The space of ideas is huge, and the ways to ruin yourself innumerable. It's more about people who have a scientific mindset who can make progress in a very high noise and adaptive environment. It's probably more about avoiding blunders than it is having some genius paradigm shifting idea.
- posting_mess 2y ago
  >Saying it's all high school math is a bit of a loaded phrase. "High school math" incorporates basically all practical computer science and machine learning and statistics. Im responding to the comment "do use llama3" not "breakdown your start" > Very few people I've worked with have ever said they are doing cutting edge math - it's more like scientific research . The space of ideas is huge, and the ways to ruin yourself innumerable. It's more about people who have a scientific mindset who can make progress in a very high noise and adaptive environment. This statement is largely true of any "edge research", as I watch the loss totals flow by on my 3rd monitor I can think of 30 different avenues of exploration (of which none are related to finance). Trading is largely high school Math, on top of very complex code, infrastructure, and optimizations.
- areoform 2y ago
  Do you work for rentech?
- makestuff 2y ago
  Would you ever go off on your own to trade solo or is that something that just does not work without a ton (like 9 figures) of capital and a pretty large team?
zjaffee 2y ago
The math might not be complicated for a lot of market making stuff but the technical aspects are still very complicated.
delusional 2y ago
llama3 is all high school math too.
DeathArrow 2y ago
>Quant trading is about "going fast" or "being super right", Going fast means scalping?

qeternity 2y ago

It’s impressive how incorrect so much of this information is. High frequency trading is about going fast. There is a huge mid and low freq quant industry. Also most quant strategies are absolutely not about being “super right”…that would be the province of concentrated discretionary strategies. Quant is almost always about being slightly more right than wrong but at large scale. What algos are you referring to derived 30 or 40 years ago? Do you understand the decay for a typical strategy? None of this makes any sense.

posting_mess 2y ago
Quantitative trading is simply the act of trading on data, fast or slowly, but I'll grant you for the more sophisticated audience there is a nuance between "HFT" and "Quant" trading. To be "super right" you just have to make money over a timeline, you set, according to your own models. If I choose a 5 year timeline for a portfolio, I just have to show my portfolio outperforming "your preferred index here" over that timeline - simple (kind of, I ignore other metrics than "make me money" here). Depending on what your trading will depend on which algo's you will use, the way to calculate the price of an Option/Derivative hasn't changed in my understanding for 20/30 years - how fast you can calculate, forecast, and trade on that information has. My statement wont hold true in a conversation with an "investing legend", but to the audiance who asks "do you use llama3" its clearly an appropriate response.
- mathematicaster 2y ago
  > how fast you can calculate , forecast, and trade on that information has. How you can calculate fast, forecast, and trade on that information has There. Fixed it for you. ;)
- chollida1 2y ago
  > the way to calculate the price of an Option/Derivative hasn't changed in my understanding for 20/30 years That’s not true. It is true that the black scholes model was found in the 70s but since then you have - stochastic vol models - jump diffusion -local vol or Dupire models - levy process - binomial pricing models all came well After the initial model was derived. Also a lot of work in how to calculate vols or prices far faster has happened. The industry has definitely changed a lot in the past 20 years.
  - richrichie 2y ago
    Very few of the fancy models are actually used. Dupire's non parametric model has been the industrial work horse for a long time. Heston like SV's and Jump diffusions promised a lot and did not work in practice (calibration, stability issues). Some form of local stochastic models get used for certain products. In general, it is safe to say that Black-Scholes and its deterministic extension local vol have held up well.
    - FabHK 2y ago
      Not only that, but Dupire’s local vol, stochastic vol (Heston in rates, or on the equity side models that combine local vol with a stoch vol component to calibrate to implied vols perfectly) and jump diffusion were basically in production 15 years ago. Since the GFC it’s not about crazy new products (on derivatives desks), but it’s about getting discounting/funding rates precisely right (depending on counterparty, collateral and netting agreements, onshore/offshore, etc), and about compliance and reporting.
- deleted 2y ago
  [deleted]
- 2y ago
Jerrrrry 2y ago
Leveraging "hidden" risk/reward asymmetries is another avenue completely that applies to both quant/HFT, adding a dimension that turns this into a pretty complex spectrum with plenty of opportunities. The old joke of two economists ignoring a possible $100 bill on the sidewalk is an ironic adage. There are hundreds of bills on the sidewalk, the real problem is prioritizing which bills to pick up before the 50mph steamroller blindsides those courageous enough to dare play.
hattmall 2y ago
Algo trading is certainly about speed too though, but it's not HFT which is literally only a out speed and scalping spreads. It's about the speed of recognizing trends and reacting too them before everyone else realizes the same trend and thus altering the trend. It's a lot like quantum mechanics or whatever it is that makes the observation of a photon changes. Except with the caveat that the first to recognize the trend can direct it's change (for profit).
- deleted 2y ago
  [deleted]

creativeSlumber 2y ago

Is there any learning resources that you know of?

Izkata 2y ago

> but most "trading" isn't as complex as they'd like you/us to believe I know nothing about this world, but with things like "doctor rediscovers integration" I can't help but wonder if it's not deception but ignorance - that they think it really is where math complexity tops out at.

posting_mess 2y ago
They hire people who know that maths doesn't "top out here", so they can point to them and say "look at that mathematicians/physicists/engineers/PHD's we employ - your $20Bn is safe here". Hedge funds aren't run by idiots, just a different kind of "smart" to an engineer. The engineers are are incredibly smart people, and so the bots are "incredibly smart" but "finance" is criticised by "true academics" because finance is where brains go to die. To use popular science "the three body problem" is much harder than "arb trade $10M profitably for a nice life in NYC", you just get paid less for solving the former.
- flourpower471 2y ago
  It is just a different (applied) discipline. It's like math v engineering - you can come up with some beautiful pde theory to describe this column in a building will bend under dynamic load and use it to figure out exactly the proportions. But engineering is about figuring out "just make its ratio of width to height greater than x" Because the goal is different - it's not about coming up with the most pleasing description or finding the most accurate model of something. It's about making stuff in the real world in a practical, reliable way. The three body problem is also harder than running experiments in the LHC or analysing Hubble data or treating sick kids or building roads or running a business. Anybody who says that finance is where brains go to die might do well to look in the mirror at their own brain. There are difficult challenges for smart people in basically every industry - anybody suggesting that people not working in academia are in some way stupider should probably reconsider the quality of their own brain. There are many many reasons to dislike finance. That it is somehow pedestrian or for the less clever people is not true. Nobody who espouses the points you've made has ever put their money where there mouth is. Why not start a firm, making a billion dollars a year because you're so smart and fund fusion research with it? Because it's obviously way more difficult than they make out.

flourpower471 2y ago

Well I work in prop trading and have only ever worked for prop firms- our firm trades it's own capital and distributes it to the owners and us under profit share agreements - so we have no incentive to sell ourselves as any smarter than the reality. Saying it's all high school math is a bit of a loaded phrase. "High school math" incorporates basically all practical computer science and machine learning and statistics. If I suspect you could probably build a particle accelerator without using more math than a bit of calculus - that doesn't make it easy or simple to build one. Very few people I've worked with have ever said they are doing cutting edge math - it's more like scientific research . The space of ideas is huge, and the ways to ruin yourself innumerable. It's more about people who have a scientific mindset who can make progress in a very high noise and adaptive environment. It's probably more about avoiding blunders than it is having some genius paradigm shifting idea.

posting_mess 2y ago
>Saying it's all high school math is a bit of a loaded phrase. "High school math" incorporates basically all practical computer science and machine learning and statistics. Im responding to the comment "do use llama3" not "breakdown your start" > Very few people I've worked with have ever said they are doing cutting edge math - it's more like scientific research . The space of ideas is huge, and the ways to ruin yourself innumerable. It's more about people who have a scientific mindset who can make progress in a very high noise and adaptive environment. This statement is largely true of any "edge research", as I watch the loss totals flow by on my 3rd monitor I can think of 30 different avenues of exploration (of which none are related to finance). Trading is largely high school Math, on top of very complex code, infrastructure, and optimizations.
areoform 2y ago
Do you work for rentech?
makestuff 2y ago
Would you ever go off on your own to trade solo or is that something that just does not work without a ton (like 9 figures) of capital and a pretty large team?

zjaffee 2y ago

The math might not be complicated for a lot of market making stuff but the technical aspects are still very complicated.

delusional 2y ago

llama3 is all high school math too.

DeathArrow 2y ago

>Quant trading is about "going fast" or "being super right", Going fast means scalping?