Starting off trading penny stocks in New Zealand, Jared Broad got his first taste of trading in his teens and knew he’d be involved in financial markets for the rest of his life.
Now, as the Founder and CEO of algorithmic trading platform QuantConnect, Jared gets to live out his love of trading and coding by pushing the boundaries of finance every single day and knocking down various barriers to entry for aspiring traders and computer engineers.
As the next subject of our Trader Dozen series, Jared recently spoke with TraderLife's Chris Johnston to share more about his passion for building the future of finance, the innovative projects that he and his team at QuantConnect are working on, and the routine that has brought him success up to this point in his career. Sharing the “users-first” mentality at QuantConnect, Jared dives deep into the initial struggles of the company and the methodical steps they took to get back on track and to where they are today.
Do what makes you happy, immediately. Don’t plan on doing it some time from now; life is too short. Just do it in some fashion, today, even if it’s just part-time.Jared Broad
1. Can you remember when and why you got into trading? (And what do you trade primarily these days if at all?)
I’ve been interested in trading since I was 16 growing up in New Zealand. I had made a few hundred dollars selling computers and wanted to invest it somewhere. Back then, stock quotes were printed in the newspaper and you’d have to scour the back page to find your latest prices. I got hooked right away, but I didn’t get into automated algorithmic trading until years later when I was doing humanitarian work and had a lot of downtime.
I’d spend six months of the year in disaster zones, and then the other six months writing algorithmic trading systems. Eventually I started working on my strategies full-time, which led to the development of QuantConnect’s algorithmic trading engine, LEAN. As I’m running QuantConnect, I have a lot less time to trade these days, but when I do, I manually trade technology stocks and options with a small personal portfolio on Robinhood.
2. What’s your trading style and how do you fit this into your other life activities? Do you trade around your life or does your life/job fit around trading?
Working at QuantConnect allows me to stay well-connected with the market as our business requires me to keep a pulse on what is happening. The day-to-day grind of running a company means I can’t watch the charts, but I’ve found that I perform better when I don’t follow them too closely.
3. What motivates you to constantly work on improving your trading/company and enjoy what you’re doing?
In our early stages at QuantConnect it was tough to receive negative feedback on our offering, but I picked up the analogy “a knife is sharpest against the grindstone.” At QuantConnect, we serve more than 65,000 brilliant people from all around the world and they challenge us to be better every day! Over time, we have sharped QuantConnect’s LEAN engine to be the leading backtesting platform in the world, serving traders in the equities, options, futures, FX, cryptocurrency and CFD markets.
4. Throughout your journey, are you able to pinpoint a moment or a routine that you started doing that then made all the difference to your trading and/or life?
I had always wanted to travel the world, but was always too worried about finances. After college, I worked in New Zealand for a year until Christmas 2007. Over Christmas break, I went home for a week to relax and read a few books that changed my life entirely. The synopsis of them was simple: “Don’t be afraid, it’ll work out.” The following week I quit my job, sold everything and left New Zealand on a cargo ship to begin traveling the world.
5. What would you put your success and progress down to? Just being lucky, your intellect and smarts or just consistent hard work? Or possibly a combination?
At least 80% of my success is due to luck and timing. Many companies similar to QuantConnect had been started in the prior 10 years but the market was never ready. We happened to catch the wave of affordable cloud computing and low-cost data when quantitative finance became mainstream. The other 20% was sheer determination and hard work. From 2011-2014, we ran the company incredibly efficiently which allowed us to survive until the market was ready for the technology. This gave us a three-year head start on the competition and enabled us to iron out the kinks.
6. I’m presuming that you’ve come up against failure in the past. What has been your approach on getting past these failures and has this evolved since?
I try to take an egoless approach to success and failure. I see failures as sunk costs which are valuable learning experiences. As long as you’ve given each moment your very best, and enjoyed the experience, then there’s no need to be emotional about it. I love to learn about the different philosophies and picked up some Buddhism traveling through Asia. One part, in particular, stuck with me, which encourages creating your own reality with your mindset.
7. What do you think sets you apart from others who are trying to be successful in what they do?
We have always taken a “users first” approach to company projects at QuantConnect, even if there isn’t a clear revenue model in sight. A few times we had to take a leap of faith that our community of users would see enough value in QuantConnect and choose us over the competition.
8. What advice do you have for those who fail, give up or never get started? For either trading or something else in life.
Do what makes you happy, immediately. Don’t plan on doing it some time from now; life is too short. Just do it in some fashion, today, even if it’s just part-time.
9. Do you set goals for yourself? And do you feel that it is a good way to achieve what you want?
In the beginning, I wasn’t the best at goal setting but my investors have hammered home the philosophy that “failing to plan is planning to fail!” Now we have quarterly goals, annual goals, and three-year projections. We generally reverse-engineer our goals with a plan for how to get there.
10. Knowing what you know now and how you got to where you are today, is there anything you would like to have done differently, maybe done something earlier in life (or later)?
I wouldn’t change anything; I’ve loved every minute of the journey and I’ve been incredibly lucky to have the support of mentors, investors, and colleagues. I have many areas to improve, but one thing I’m still working on today is being more vocal about what the company is doing and sharing that with the community. I’m a developer at heart and happiest writing code with headphones on. I’m constantly working to become a better CEO and leader for our team!
11. Could you talk a bit about what QuantConnect is, why it’s unique and what some of the tools are on your platform that make it easier for traders to learn how to build and deploy algorithms?
QuantConnect empowers individuals with powerful algorithmic trading technology that lets you design and live trade strategies. We believe everyone should have access to these tools and have led this open-finance initiative since 2012. It's incredibly difficult to do this on your own; you need financial data, cloud computing and years of spare time to write the backtesting technology. Through QuantConnect, we’ve reduced backtests to only a few seconds.
12. On your website, you mention ‘fund management professionals will increasingly seek powerful new technology to design investments and manage their positions.’ Do you believe discretionary trading could be a thing of the past with the increasing ability and popularity of algorithmic systems?
Algorithmic trading allows you to react faster to changing market conditions, enter positions quickly on breaking news, and control your losses when the markets go south. With an algorithm, you can monitor thousands of assets in real time, processing millions of data points to make a decision almost instantaneously. We believe all investors will need these abilities to remain competitive as the markets become increasingly efficient.
13. The QuantConnect ‘Alpha Streams’ platform provides individuals with the opportunity to secure funding/licensing from quant funds. Was this the aim of QuantConnect from the start, or was this a gap in the market you discovered as you progressed and fund managers were requesting? How will Alpha Streams change alpha generation for funds?
We have explored many funding-based business models over the years. We always appreciated that the community was a tremendous asset for QuantConnect but previously never had the right idea to explore funding our users’ algorithms. With Alpha Streams, funds compete to license alpha from the community, greatly increasing the probability an individual algorithm will be licensed.
This marketplace approach to licensing alpha is unique and we believe will revolutionize how funds find alpha. The marketplace can be searched via an API, allowing funds to automate their alpha search process and identify the strategies that fall in line with their investment thesis. Decentralized alpha creation, licensed in a fair market by automated API, will make funds more efficient and allow contributors from around the world to compete in a pure meritocracy.