An Insight on Quantitative Trading
In online trading investors uses a lot of tools and strategies to trade online. There are many different techniques are available to follow. Technical analysis means the research of historical market data, market trends and trading volumes. Technical analysis is very important part of online trading.
What is Quantitative Trading?
Quantitative trading is a kind of technical analysis, which refers to an investing technique that relies on computations and mathematical formulas to determine the trends and patterns in financial market data. This (quantitative) investing technique uses complex algorithms and supercomputer analysis to discover the investing opportunities. It is a computer based analysis system that is used to track about the movement of a stock in order to sell or buy at a perfect price.
How does Quantitative Trading work?
Quantitative trading finds out the price movement (high or low) trends or patterns that usually known as trend following. It also searches for correlations between two or more stocks that known as pair trading. This famous technique is mainly employed by investors who can afford the expensive and complex computer software system. The quantitative technique requires the powerful brain and hardware system.
The objective of the quantitative trading is to find the perfect investment opportunities like underpriced securities or the assets which are over-priced. Quantitative trading technique is a big alternative to qualitative trading. Qualitative trading is an investment technique for the investors based on expert insight and analysis of the financial market or the stock market.
Qualitative trading: Common techniques
Pattern Identification: Quantitative investing technique searches for patterns in financial market data and finds out trends or the hidden relationships between two or more stocks. A well known technique is called statistical arbitrage. In this technique, quant models finds out the stock prices that are closely related.
Quantitative Value Investing: Value investing technique is a common stock trading strategy in which an investor searches the market for stocks that have a low price value in relation to their intrinsic value.
Momentum Investing: In trading, market trends refer to a trend for financial markets to move in a certain direction over a period-of-time. Quantitative investing traders may find out market momentum that prices will continue to move in an individual direction.
Who uses quantitative trading?
Quantitative investing technique is used mostly by the people, who have the ability to afford the expensive and complex computer hardware system. By the practice of many mathematical formulas and functions, an investor or investment advisor might be better able to see what weaknesses in a portfolio that could result a potential losses if it was left alone. There are cost benefits attached to quantitative trading. Investment advisers or investors often diversify across different securities in different regions.
Quantitative trading technique or model is designed to reduce the cost of buying and selling many securities in various exchanges by streamlining those applied trades.
To be a great trader you need to follow the technical analysis techniques especially qualitative trading. It is a digital system technique to analysis the market trends with perfect mathematical functions ad complex algorithms. It can be a great technique to make good income from trading. Be aware that, without proper market analysis and tracks of trends, you will not able to trade perfectly.