September 1, 2012

Introduction to the business startup EquaMetrics

EquaMetrics is a New York-based financial software and technology company founded in 2011. The company is currently developing the Rizm Platform, which is a web application to make it easier for amateurs to use algorithms when trading stocks and similar assets.

Normally when developing trading algorithms, you need to know how to program the software yourself, or you have to consult an expensive software developer. If you are using Rizm, you don't need to know how to develop software since Rizm has a drag-and-drop interface as described in the video above. When you have created your algorithm, you can test it against historical data and real-time data. If you feel you have the need for speed and would like to compete with the big banks at Wall Street, you can use Rizm to develop High Frequency Trading (HFT) algorithms. The limit here is 3000 orders each second.

The software is not free - you have to pay $100 per month for the basic solution. The limit with this solution is that you can only use one algorithm. To use 50 algorithms, you have to pay $300 per month for the more expensive solution.

Why EquaMetrics is a good idea
  • I believe we can compare Rizm with services like Blogger. If you remember the time before all these blogs we see today, you also remember you needed to know how to develop software to publish something on the Internet. When services like Blogger arrived, basically everyone with a computer could publish what they wanted on the Internet. With Rizm, basically everyone can create their own trading algorithms.

Why EquaMetrics is a bad idea
  • It can be difficult for amateurs to compete with other professional HFT-traders. To make faster trades, you have to be very close to the computer that executes the trades, and to be able to be close to that computer, you need to pay lots of money. 
  • One other problem is fees. Each time you buy or sell a stock, you have to pay a fee to the bank. With 3000 orders per second, these fees will grow very fast. Large professional banks can pay lower fees, but will amateurs be able to pay the same low fees?