If I was starting again, I would begin with a larger amount, probably nearer 100,000 USD (approximately £70,000). The generally accepted ideal minimum amount for a quantitative strategy is 50,000 USD (approximately £35,000 for us in the UK). You also need to consider your trading capital. Ask yourself whether you are prepared to do this, as it can be the difference between strong profitability or a slow decline towards losses. Hence a significant portion of the time allocated to trading will be in carrying out ongoing research. Few strategies stay "under the radar" forever.
My belief is that it is necessary to carry out continual research into your trading strategies to maintain a consistently profitable portfolio. If your strategy is frequently traded and reliant on expensive news feeds (such as a Bloomberg terminal) you will clearly have to be realistic about your ability to successfully run this while at the office! For those of you with a lot of time, or the skills to automate your strategy, you may wish to look into a more technical high-frequency trading (HFT) strategy.
Your time constraints will also dictate the methodology of the strategy.
For those of you in full time employment, an intraday futures strategy may not be appropriate (at least until it is fully automated!). Do you have a full time job? Do you work part time? Do you work from home or have a long commute each day? These questions will help determine the frequency of the strategy that you should seek. Understand that if you wish to enter the world of algorithmic trading you will be emotionally tested and that in order to be successful, it is necessary to work through these difficulties! However, many strategies that have been shown to be highly profitable in a backtest can be ruined by simple interference. This can be extremely difficult, especially in periods of extended drawdown. Since you are letting an algorithm perform your trading for you, it is necessary to be resolved not to interfere with the strategy when it is being executed. Trading, and algorithmic trading in particular, requires a significant degree of discipline, patience and emotional detachment. I would say the most important consideration in trading is being aware of your own personality.
Trading provides you with the ability to lose money at an alarming rate, so it is necessary to "know thyself" as much as it is necessary to understand your chosen strategy. In order to be a successful trader - either discretionally or algorithmically - it is necessary to ask yourself some honest questions. Identifying Your Own Personal Preferences for Trading
I'll explain how identifying strategies is as much about personal preference as it is about strategy performance, how to determine the type and quantity of historical data for testing, how to dispassionately evaluate a trading strategy and finally how to proceed towards the backtesting phase and strategy implementation. Our goal today is to understand in detail how to find, evaluate and select such systems. In this article I want to introduce you to the methods by which I myself identify profitable algorithmic trading strategies.