In an office overlooking downtown Boston, the views are partially obscured by math formulas and technical drawings that have been scribbled on the windows. Wearing a T-shirt with the words machine earning printed on it, Luca Lin says the formulas are being developed to help trade futures contracts and currencies at lightning-fast speeds.
We are doing on average $1 billion of daily transactions, says Lin, a co-founder of Domeyard. Its a high frequency trading strategy that is signal based.
(From left to right) Luca Lin, Christina Qi, and Jonathan Wang.
At 27, Lin is part of a new wave of entrepreneurial young quants who are starting trading firms in the face of daunting obstacles and challenges. But Lin and his two 26-year-old co-founders, Christina Qi and Jonathan Wang, have found believers.
Domeyard has raised $10 million for its general partnership from the likes of Howard Morgan, a co-founder of Renaissance Technologies who later became a venture capitalist, and Gary Bergstrom, the founder of quantitative investment firm Acadian Asset Management. Domeyards 14 employees include former portfolio managers who led high frequency trading teams at Quantlab, Athena Capital Research and Sun Trading, as well as former senior engineers from PDT Partners and Lime Brokeragesome of the biggest names in quantitative and high frequency trading.
Brash and optimistic, Domeyards founders have structured their firm as a hedge fund that doesnt charge its investors a management fee, but does take between 40% to 50% of the profits. Qi says the firm, which currently manages in the low tens of millions of dollars, runs a low capacity strategy that currently makes between 10,000 to 40,000 trades daily. Although run as a hedge fund, Domeyard closes out its trades like many proprietary trading firms do, ending each day with no market exposure.
The Domeyard crew is operating in a field dominated by big firms with years of operating history that have spent fortunes on infrastructure and armies of mathematicians and engineers. In addition, this low-volatility stock market era has cut deeply into some of the richest strategies of high frequency traders, causing a wave of consolidation in the industry.
But Domeyards young founders think that there are some advantages to being the new kids on the high-frequency block. The firm is working to unlock profitable trading strategies by using sequential machine learning and making large scale computations of statistics. I feel like we can do better in a lot of areas and with some technological problems because we started from scratch, says Wang.