Have you ever wondered if you can start some online business and make a massive profit in it? Are you specifically interested in trading, but you are unsure how much time, effort and talent it takes to become a professional?
Suppose you are interested in dedicating yourself to some kind of trading, and you have a sense of mathematics, logic and statistics. In that case, we present Quantitative Trading as the best option for you for numerous different reasons.
However, before we proceed to these reasons, let’s give you a more specific explanation of what quantitative trading is and why it is the current ideal occupation online, shall we?
Fundamentals of Quantitative Trading
For those enthusiastic individuals interested in knowing more about this particular trading, it is essential to understand that Quantitative trading consists of different types of trading strategies based on quantitative analysis.
The quantitative analysis is based on mathematical computations, alongside number crunching, to identify all trading opportunities. The two most essential and standard data inputs that are used in the quantitative analysis are price and volume, as their primary inputs to mathematical models.
Transactions are, without exception, large since hedge funds and financial institutions primarily use this type of trading. It also may involve purchasing and selling more than hundreds of thousands of securities and shares. Nonetheless, it’s not a secret that quantitative trading is becoming increasingly used by individual investors.
What do quantitative traders use?
Quantitative traders are clearly taking advantage of mathematics, modern technology, and the availability of comprehensive databases in order to make rational decisions while trading. These traders are using trading techniques and creating a model of them using mathematics.
Then, these traders proceed to develop a particular computer program that will apply that model to historical market data. After that, the model is being backtested and well optimized. If favourable results are achieved, the system will be implemented in real-time markets alongside natural capital.
How do quantitative models work?
It is interesting to note that quantitative models function in a way that can be best described using an analogy. For example, we’d like to compare it with a simple weather report where the meteorologist forecasts a 90% chance of rain simultaneously as the sunlight.
The meteorologist is responsible for deriving this counterintuitive conclusion by collecting and analyzing different climate sensors from sensors throughout the area. How is it possible? Well, a computerized quantitative analysis reveals graphic patterns in the data.
Once these patterns are compared to the same patterns revealed in backtesting, i.e. historical climate data, and cut 90 out of 100 times the result that it will rain, here is what’s happening: The meteorologist can be confident about the conclusion of the 90% forecast. Keep in mind that quantitative traders apply this same process to the financial markets in order to make trading decisions.
Can you make money from Quantitative trading?
What most people are interested in, when it comes to any business, is whether it is possible to make serious money from it or not. This is often the main reason why many start an online business.
However, what is essential to understand is that you must have particular talents and abilities for mathematics, applied statistics, computer science, logic, and the like to achieve top success in quantitative trading.
Of course, no great success comes overnight on its own. Therefore, it is imperative to learn daily from more experienced traders, practice, choose the ideal trading strategies, and be persistent on your path to success! Only in this way will you be able to achieve a very successful and severe career in Quantitative Trading, and we wish you good luck in that!
