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Paper trading and quantitative analysis

What are some useful tools to perform quantitative portfolio analysis when doing paper trading/investing? All of my finance classes have been highly theoretical and I really don't have a good idea about what practitioners actually do. For example, does anyone actually calculate the efficient frontier for a given portfolio?
 
I understand my question may be a little broad, but I would very much appreciate it if anyone could point me to a link or a book on the subject.
 
I'll check out the R packages. How do quantitative asset managers go about selecting and optimizing a portfolio with these (or other) tools. A link to an online guide or a book reference would be very much appreciated
 
I'm just not sure if any of this optimization is necessary for portfolios with low capital. If I put in my own money eventually, I'll only have a few thousand to trade with/invest (I'm still a student) so proper diversification might not be possible.
 
Learning is definitely my main goal. Not losing all the capital would be nice, but the learning experience is probably more valuable. I'm just wondering what kind of techniques would be at all applicable to such a small portfolio -- even if they're not actually useful for growing a portfolio of that size, all that matters is that they are somehow applicable.
 

Ken Abbott

Managing Director
The problem is that paper trading is always and everwhere COMPLETELY different from real trading. Think of it like the difference between playing Madden NFL Football 2012 and suiting up and going onto the field. Your loss tolerance when it's your own money is nothing like what it is on paper.
 
Yeah, I can imagine that I'll be a lot more cautious when I have some skin in the game. That's why I'll want to do paper trading only with the amount of money I'll be willing to put in myself.
 
It also tends to lend itself to a false sense of security that you will always get a full fill at the desired market price and that your stops will always trigger.

Consider your first $5k a sunk cost and quickly forgo the paper account once you figure out what you're doing.

At less than the going rate for a typical grad-school course, its the best education you'll find.
 

Ken Abbott

Managing Director
It also tends to lend itself to a false sense of security that you will always get a full fill at the desired market price and that your stops will always trigger.

Consider your first $5k a sunk cost and quickly forgo the paper account once you figure out what you're doing.

At less than the going rate for a typical grad-school course, its the best education you'll find.
Once again, I fond myself in violent agreement with Ms. Amanda.
 

atreides

Graduate Student
I'll check out the R packages. How do quantitative asset managers go about selecting and optimizing a portfolio with these (or other) tools. A link to an online guide or a book reference would be very much appreciated

The PerformanceAnalytics package could also be useful.. most of the packages have pdf tutorials on rcran. Also checkout r-forge
 
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