Open-source trading software? Are we insane?

The Black-Scholes formula is not a secret.

If you don’t believe me, you can read the formula, the original paper, or a tutorial. You can even buy the t-shirt. (OK, I created that one to make a point). An algorithm to compute a price using the Black-Scholes formula is not even a secret. You can get implementations in many languages, and you can read papers about how to make them better. Because it’s not a secret, getting it right will not make you a better trader. Getting it wrong, however, may make you a lot worse. And poorer. Knowing how to use it appropriately (and keeping that knowledge secret) is how you make enough money to buy your own Caribbean island.

When I need to calculate partial derivatives on European options, I feel much better about entrusting that task to the open source QuantLIB library than using a closed source tool because I can assure myself of its correctness by looking at the code. More important, the phalanx of PhDs and C++ wizards that make up the QuantLIB community can attest to its correctness. The world of finance is starting to understand this proposition. Notably, the QuickFIX project and the newer QuickFIX/J project have been successful in providing high-quality implementations of the widely-used FIX protocol. Noting those successes, we believe the open source model has much more to offer.

For these and many other reasons, we here at Marketcetera are building out open-source infrastructure for the finance and trading industries, providing open implementations of the non-secret algorithms and features, allowing you to focus on the secret pieces that drive your business. We will use this space to keep you posted on our progress and on the growing role of open-source software in finance.

13 thoughts on “Open-source trading software? Are we insane?

  1. I completely concur after having supported widely disparate trading systems for a single group. I hope I could contribute to your noble efforts.

  2. Vamsi,
    Thanks a lot for your interest. The best way to contribute is to download the Marketcetera platform and use it, and to submit bugs and feature requests.
    We would love for you to contribute to code as well, of course – so take a look at our contributions
    page to see what interests you.

  3. interesting idea. Why did you choose the more restrictive GPL, as the open source license, instead of MPL, lGPL etc., licenses that allows linking to your code without causing the parent code to become open sourced as well?

  4. John, thanks for your interest. The clause you are referring to in the GPL (v2) of course only applies if you are redistributing the code. Using the code in-house to do real trading does not subject you to these terms. Therefore we think that the license will not be very restrictive for the vast majority of users. For those who need redistribution rights, we will be offering other licensing options in the future in addition to the GPL.

  5. What is interesting is how are you planning to generate revenue from marketcetera. Support and consultancy? Any way this is the coolest development on the byside technology front.

    Suminda Sirinth Salpitikorala Dharmasena

  6. Sirinath,

    Thanks for the kind words. You are correct – we currently provide both support and professional services (and custom implementations) for the Marketcetera Platform. We’ll be offering additional value-added services on top of the platform in the future as well, and plan to derive revenue from these offerings.

  7. Pingback: UAL: The Balance Between Efficiency and Confirmation « Marketcetera Platform Blog

    • Nelson, apologies for the frustration. Registering to download software is a fairly standard process with a lot of commercial open source companies, such as MuleSource.
      Asking our community to register helps us with making our product better – it helps us track the number of downloads, and helps us see which features are more interesting and useful, and allows the community to engage in a better way.
      Apologies for making your Marketcetera experience more frustrating, but it does help us build a much better product if we know who is using it and why. It makes it easier for us to involve the community in future feature development, in helping us prioritize the features on the roadmap, etc.

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