Quant analytics: A thought experiment, quantitative trading strategies vs traditional/fundamental trading strategies

(Last Updated On: February 24, 2012)

Quant analytics: A thought experiment, quantitative trading strategies vs traditional/fundamental trading strategies

What is the difference between black box trading software and a trader that is unable or unwilling to explain how or why they make their trading decisions(i.e. its intuition driven)?

 

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At the outset they are the same: one is unwilling to show a back-tested edge, and one is not equipped. The first one can be ground-down with the lure of investment, the second cannot. The middle ground is Macro RV: models to help understand the world and a frame work for testing, which can be discussed (in a whisper, but discussed non the less), and an appreciation there is a large vector of qualititive experience that drives the box.

 

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I can better address: ” A thought experiment, quantitative trading strategies vs traditional/fundamental trading strategies “. Given the advent of high frequency trading, at any given instant the observed price of a stock (for example) reflects “quantitative trading strategies” and not fundamentals. In fact, there is a paper athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1977561 which use Nanex graphics to explain seeming price irregularities in high frequency trading. At the end of the day, traders and orr money managers want to produce alpha. Here again, there is some controversy about who can do it, how, and why. Those issues are addressed athttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=1976082

 

 

NOTE I now post my TRADING ALERTS into my personal FACEBOOK ACCOUNT and TWITTER. Don't worry as I don't post stupid cat videos or what I eat!
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About caustic

Hi i there My name is Bryan Downing. I am part of a company called QuantLabs.Net This is specifically a company with a high profile blog about technology, trading, financial, investment, quant, etc. It posts things on how to do job interviews with large companies like Morgan Stanley, Bloomberg, Citibank, and IBM. It also posts different unique tips and tricks on Java, C++, or C programming. It posts about different techniques in learning about Matlab and building models or strategies. There is a lot here if you are into venturing into the financial world like quant or technical analysis. It also discusses the future generation of trading and programming Specialties: C++, Java, C#, Matlab, quant, models, strategies, technical analysis, linux, windows P.S. I have been known to be the worst typist. Do not be offended by it as I like to bang stuff out and put priorty of what I do over typing. Maybe one day I can get a full time copy editor to help out. Do note I prefer videos as they are much easier to produce so check out my many video at youtube.com/quantlabs