Built my first "real" webapp to help retail traders figure out whether to trust the people posting trading ideas on Reddit. It links each post to its performance and lets you see the prior trading ideas suggested by each person.
Not much of a developer but I've got several years of experience in the quant finance industry. Seeing people talk about plowing their rent money into an idea when the ideas are hardly financially sound was really frustrating. At the end of the day, it was my non-technical friends and people like them being sucked into these pump and dump schemes.
Happy to get any feedback. Here's an example page if you're not sure what to click:
It's interesting to crawl through some of the entries from leaderboard people. It seems like most of their bets are neutral or slightly random, but then they'll be propped up with a lucky call on GME from January or some other single-stock pick.
For example, this poster apparently just spammed GME posts during the run-up and got lucky, but if you followed their other calls (REAL and AI) you'd be deep in the red. Their GME spam puts them in the top 3 medium traders with a 236% 1-month return, but everything else they've posted has performed terribly: https://duedilly.io/trader/r.Ottikarottiii/
It would almost be more helpful if there was an option to subtract out the well-known meme stocks like GME. Some of these leaderboard entries have not so great results for their own calls, but they happened to post about GME at just the right time to dominate their average.
Thanks! I know exactly what you mean. I've experimented with using medians instead of means for aggregating performance as well to lessen the impact of that sort of thing.
Currently, it's pretty difficult to crack the top without something like that. At the same time, I think (as another commenter pointed out) the distribution of returns for the way these traders pick stocks is pretty skewed/lottery-like. One hesitation I have about the median is that although it's more robust to outliers its less reflective of the true performance achieved.
Maybe putting some stocks in a "meme tier" and then excluding those might capture what your describing, thanks for the feedback!
Seconding the parent commenter’s request! No idea what’s easy or hard for you to implement in terms of UI or functionality, but it would be great to be able to exclude either the top N most-mentioned stocks (via a slider, with text listing them) or specific stocks by entering their symbols.
Regardless of whether you end up doing this, great work and thank you!
I don't know who you include in "most people", but from what I understand of the professionals, that's not at all how making money works. If what you describe happens, it means the portfolio risk dial is set way too high.
The mistaken idea behind that is that people think risk and reward covaries. It does for single wagers, but when assessing profitability of investments, we must look at long term growth. When we do that, there's a risk level that maximises growth.
Lower risk than that gives you slower growth but with less variability. Higher risk is just stupid because it gives you slower growth and increases your risk of ruin (by getting variability over levels supported by your capital.)
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People who actually make money on this are good at inventing their own insurance in ways that lowers their risk significantly. They make very specific, relatively independent bets that aren't just proxies for "exposure to the market".
The Reddit people whose posts are being used here, but I can't be sure it's just a guess. I'm not talking about fund managers that follow strict rebalancing and risk guidelines. The creator of this webapp acknowledges this and says that it's very hard to be at the top of the rankings without this happening.
You're talking about the efficient frontier from Modern Portfolio Theory, no?
I'm referring to the analogous concept from E log X optimisation. (The "Kelly criterion".)
The efficient frontier based on Markowitz' mean--variance optimisation does not help you find a risk level that maximises growth, because it looks at one investment in isolation, not sequential reinvestment over a long period.
The analogous concept I'm referring to is the set of portfolios that are linear combinations of risk-free assets and the E log X optimal portfolio. These are all Kelly optimal under more and more restrictive constraints on allowed variation, but come with slower growth as a trade-off.
To reiterate, the E log X "efficient frontier" talks about how fast your portfolio will grow over time as you reinvest your gains. The Markowitz efficient frontier tells you something about the statistical nature of a single investment opportunit.
Sure, it does. But it does so in the same sense that MPT requires known mean and variance. In either case, we go with estimations.
In many practical cases, the joint distribution of outcomes is easier to estimate safely than the variance. The joint distribution of outcomes can be approximated by something very close to the actual observed distribution of outcomes. However, the variance has, in a sense, to be derived from a fitted model. This is one step further removed from reality which risks introducing more incorrect assumptions.
Other reasons are that the variance doesn't even exist for some assets (too heavy tailed distributions) and that errors in estimating the joint distribution can be smaller thanks to at least some level of central limit theorem.
Interesting analysis and I think I've reached similiar conclusions when talking to my friends and associates and seeing their results over the last ~5y; high risk leads to lot of capital loss often for them.
I usually have been playing low-risk investments and want to change that, any articles or advice to make independent high risk bets that actually end up lowering overall risk?
I accidentally wrote this comment backwards and I'm on a device that doesn't let me edit very well. You'll have to put up with some nonsense drivel until you get to the part you actually asked about.
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I don't have much advice on that, specifically, other than
1. Be very careful. When shit hits the fan and you need that independence most, all correlations go to 1.
Related to the above, understand the cut-throat nature of the business. Actually, reading The Poker Face of Wall Street by Aaron Brown might help with this. The difficult part is not winning big; the difficult part comes after that, when you need to convert people's promises into money and successfully walk out with it.
Nobody is looking out for you. It's nobody's job to make sure you get what you are supposed to. I bring this up because I see people spend lots of time concocting advanced technical strategies but then forget the people skills required to get away with it.
2. Learn and play around with as much statistics as you can find the time to. I like reading actuarial textbooks because many of them work in insurance which means they do specifically that.
3. I'm a big fan of Aaron Brown for putting into simple words many of the most important concepts. Read Risk Management for Dummies (honestly!)
In particular, once you start making specific bets, you don't want to have stop losses that prevent you from losing too much money. That's a sure way to lose money. Instead, think like a scientist. Do hypothesis-based trading. "I think that X, because Y. If I see signal Z from the market, one of my assumptions are invalidated and I will reject my hypothesis and exit the trade."
4. Set aside a small amount of money to practise with. Try to invest in ways that expose you to specific spreads, like big vs small market cap narrowing, or service vs product sectors widening.
Try to make these actual bets you believe in. The point of this exercise is that you will, at a low cost, see how often you're wrong and go back to a plain constant fraction rebalanced portfolio, with a small but solid mix of high and low volatility assets.
It's really hard to do much better than that.
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Edit: upon re-reading your question, I think I misinterpreted it. Maybe you're just asking about how to find a small but solid mix of high and low volatility assets to have in your constant fraction rebalanced portfolio.
One start is reading Thomas Cover's 1991 paper on the Universal Portfolio. In order to understand that, however, you might need to back up a bit more into the history of E log X optimisation. The book "Kelly Investment Criterion for Capital Growth" is a collection of historic and modern papers on E log X, including Cover's. It's a very good book. Though it takes a bit of working through results practically to understand.
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That will help you find a decent mix of high and low volatility. Specific numbers are no big deal, though. I would recommend at least 50 % low volatility, but some people (like Taleb) suggest up to 90 %.
The mix of high volatility is also not that sensitive to specific numbers. To avoid having to do difficult optimisation, just split evenly between whatever assets you want in there.
To avoid correlations, just look for things that seem like they're not cointegrated. There's no point in optimising this too hard either, because as I started out saying, when you need uncorrelated returns, they will be correlated.
Thanks! Yeah, I don't want to put anyone down with the worst traders page but worst stocks could be fun, especially if it's done as a way to bring people together around their losses and better inform themselves on what to look out for.
I took a gander-- the leaderboard lists 10 people making better than a 17% weekly return (3500% annualized). After extensive work cross-referencing the list with this one [1] my team was unable to find 10 candidates. Another explanation of outsized returns was deemed remotely possible but downvoted into oblivion [2]. I think it's really enticing to think you can make it rich by reading something on Reddit and doing about as much research as you'd do before buying a refrigerator.
Interesting social experiment that feels like it has the unethical potential to super-charge pump and dump schemes by lending credence to social media trading ideas and aggregating the information in one place. Inexperienced investors/traders browsing this website might get the impression that it's indeed profitable to be "part of the pump".
Perhaps consider going further back in time, before GME. GME-like events have occurred, but to a smaller extent, prior to GME.
Perhaps consider including posts of people who lost money buying at the top. Few posts are of this nature, but they occur when previously popular tickers dip.
Perhaps include past trader performance. Having been on r/WSB years prior to GME, I've noticed that the _active_ community tends to be made of newly joined users. r/WSB has a huge subscriber base (reddit accounts who have "joined" the subreddit) but far fewer daily active users. Pulled these numbers in the past in an attempt to see if mentions of a stock ticker could fortell a stock's rise (effectively a forward indicator of a pump). Unfortunately, mentions lag the movement. Mentions also lag the eventual rapid dip (so you can't rely on the dip in the mentioned popularity of the stock to sell prior to the dip).
I've noticed something similar with mentions being a poor leading indicator. Anyone can submit any reddit post to the site so hoping with exposure these older traders can submit those older posts as well, as it helps corroborate their track record.
So this is a quick hack -- I have a user registration system but I didn't want people parking on reddit usernames. For any user that gets scraped from Reddit I add a "r." in front of their username. The '.' character is invalid in usernames that are user-created. If you sign in with Reddit, you can change the username to whatever.
Thanks! I'm unable to post it there unfortunately (or really anywhere on stocks subreddits) due to moderation rules around promoting webapps but I've seen a lot of those posts.
That is a cool idea. Also, posting it there is going to jack your hosting costs immediately, haha. But why not post it - what's the worst they can do, ban you for posting something useful?
Whats the time scale you are looking at to estimate accuracy? It seems to be real/near real time which can skew things from what idea turned out to be right to what idea got the biggest amount of suckers to buy into a pump and dump scheme since the stonks/wsb subreddits now have enough members to push the needle especially on relatively low trade volume securities and stocks.
I consider 1 week, 1 month, and 1 year horizons and report all 3. For people pushing things around you expect to see it more on these short/medium term horizons.
So 99% of DDs are long and I didn't want to get sidetracked trying to build a guessing system since many Reddit posts delete their contents (the titles are not removable which helps me).
For that reason I auto-classify as bullish but there's a report page that anyone can click to report mis-classified posts.
Looking at the recommended page duedilly.io/asset/ZOM
"Posts that are not bold have been removed/deleted on Reddit" -> "Posts that are bold have been removed/deleted on Reddit"
DD is not defined (one would have to go to the main page) and it is not a well known acronym.
I've been in the industry for several years and had the same reaction when I first starting seeing wallstreetbets posts. For a while I even thought it stood for "double down" when it seemed like these were encouraging posts. Good point from you and the parent commenter -- I'll make that clearer.
3x tech etfs are pretty good.. so are the usual fang stocks. Some ppl on that sub have demonstrative skill but like finding diamonds in the rough. They tend to hone in on maybe a dozen stocks that have been shown to have consistent returns such as Amazon and Facebook. Gl, ymmv
Cool website. Percentage is a good place to start, but if you want to get closer to the alpha of a given idea, dividing the percentage return by its beta to the benchmark, then subtracting the return of the benchmark over the same period will get you closer.
I did consider beta adjusting performance and may do this in the future -- it does require more infra set up (ex. computing historical betas for these posts back in time).
Since my target demographic in this case was people on Reddit following trading advice I wanted to keep things straightforward first and slowly over time introduce those educational components to get it closer to how the industry thinks about it.
This is a big ask, but can you make one that analyzes seeking alpha posts? Seekingglpha.com ... Generally quite high quality posts, but I always lack the track record knowledge... To have this due diligence tool on the authors would be gold!
If you're looking to work with someone on this, reach out here: revoh98186 at kibwot.com (temporary email). I'm a fullstack dev with an interest in finance/trading and scouting for a side project.
I would like to open it up more generically to allow for sharing any ideas (like from not Reddit) -- the platform isn't tied to it.
The big issue for me is accountability. People make public claims and delete the things that didn't work out, so a lot of platforms can be gamed. On Reddit, the titles of posts can never be deleted so that provides one way to verify it. I think that's valuable if you can start auto-adding tweets/blog posts/reddit so people don't mess with their records.
If you delete your own post it will show up as "Posted by u/[deleted]"
If a mod deletes it, it will still be linked to your account.
So it is possible to fake the records.
"How it works: to be eligible for the leaderboard, traders must have at least 5 live posts (i.e. non-duplicated or grayed out on their page) and have posted about at least 3 unique tickers. The horizons used are 1 week for short term, 1 month for medium term, and 1 year for long term -- however, these are simply measurements and do not reflect the trades that these individuals actually did. It simply mimicks a simple strategy of trading when they post."
1. I would like to know exactly how long a user has been on Twitter. I would like to filter out all users that joined after GME rebellion. It might help identify the hedge fund guys whom are their just to pump, and dump? I am not that familiar with Twitter's api, but felt after the publicity, most professionals would ruin the group.
> Okay Retards, I will make this long because apparently you Apes seem to like long posts, even when a YOLO opportunity like this
But what do I know, I'm just a triggered liberal.
Edit: I understand how they use the "r" word on WSB as it's been in the mainstream news for a year. I'm saying that it reflects poorly on a business, signaling that it failed due diligence, on there homepage of all places.
I mean you're more than welcome to share your opinion and/or be offended. I don't get why it's gotta be a generalized "triggered liberal" thing or w.e. - just seems so unproductive towards any end. If you want the language to stop, making it an us vs them thing doesn't appear to be a successful strategy.
If you're just memeing then carry on. It doesn't really bother me, I just never really understand the call-to-political-arms mentality for this kinda stuff, because it doesn't really change how people talk in my experience - it only changes who they talk to, which I think is counter-productive for society. A society built on private chatrooms is just putting everyone deeper into their own echo chamber.
I’ve been called an SJW for politely asking people to stop saying “retarded” or the n-word (or saying things that sound close to the n-word to allude to it). So even if you politely ask, some people will interpret it as an us-vs-them fight anyway.
I think the triggered liberal comment was an attempt at levity to make the feedback less harsh so that people might have a less visceral reaction.
People don't like bad faith being injected into their speech, and its absolutely appropriate to treat such attempts as an act of aggression, because it is.
This is the dialect of /r/wallstreetbets. Apes strong together and all that jazz. To call someone a retard is a term of endearment, or a (not so) secret handshake.
To every smoothbrain that responded thusly, if you only use a word in private amongst certain other people, then it feels a lot like we both know that’s a word you shouldn’t use.
Like scientists, doctors, and programmers who only use certain words in the company of their fellow practitioners? Or say any number of fan bases (think Anime, or personality-driven youtube channels) that have their own lingo?
Hilarious to call people "smoothbrain" while decrying "retard" Clearly it doesn't bother you when someone's intellect is questioned, so what's the issue?
No, any euphemism people invent to talk about things that are negative will inevitably end up as slurs, because people view these things as negative. It's inevitable. Even when they invent inscrutable acronyms like DAMP or ADHD, people will use them as slurs when they denote things that are undesirable.
This is not an example of that though, since "retarded" is not a slur in WSB, it's the opposite.
I've been using WSB and what has come since for many years as additional sources of DD; and it reads like "Howdy do fellow kids" type nonsense from someone who isn't part of the community.
The Ape stuff is cringe, because that moniker is adopted for those who can't read/can only buy and hold stock and is purely focused on GME anyway.
This could be a great resource and it doesn't need to be directed to people playing up ridiculous persona's on reddit when the reality is those who will read this are intelligent investors.
Nowadays the best performing traders share their edge to make their edge. Pump and dumping small market-cap cryptos can lead to insane ROI if you're seen as 'the best trader' because them jumping in is how you get that nickname in the first place.
Eh don't really agree with this. it's just that you don't hear about the ones who keep their heads down and grind unless you are in/very close to the industry.
I remember reading the Market Wizards books and this would come up often in the interviews. Some felt strongly about it, some didn't think much of it. It depends on the person.
Typically there is more money to be made selling subscriptions than trading unless u are a major hedge fund. Desperate ppl look for any sort of guidance even if it does not work well.
Not much of a developer but I've got several years of experience in the quant finance industry. Seeing people talk about plowing their rent money into an idea when the ideas are hardly financially sound was really frustrating. At the end of the day, it was my non-technical friends and people like them being sucked into these pump and dump schemes.
Happy to get any feedback. Here's an example page if you're not sure what to click:
https://duedilly.io/asset/ZOM