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Quantitative trading

Quants trading is a strategy that uses complex statistical and mathematical function using automated trading. This model heavily relies on the dataset of price, time, the volume of the stock.

what is Quants trading
It uses the historical volatility data of the stocks and recognizes the patterns for a particular stock, sector, index, etc. It is a very complex procedure and can only be done with advanced computers and superfast internet and most importantly different types of analyst that can read the data and make patterns.
Everything in this world has patterns be it anything stocks, economy, business, etc.
Quants analyst research for months and then come up with a strategy of buying and selling while the base of their research is historical data. After doing their research they develop several different models and test them on the virtual stock market and the model that gives the highest return is selected for trade.

History
Quantitative finance has a long history and a list of great economists.
theory of speculation by louis bacheleir is a great economist and if haven't read about the theory of speculation then you don't know anything about yourself.
portfolio selection is given by Harry Markowitz was the economist who taught us how to make a perfect portfolio.
Stochastic calculus is given by a very famous economist whose name is Paul Samuelson.
there are many other great achievers in this field, But the person who capitalised on this and made billions of dollars is Jim Simons who was a mathematician and researching on some formula then he designed software that does the quants trading, The quants field is filled with scientist, mathematicians, statisticians, etc.
Jim Simons

How Quants works?
Let's take my favourite example that is TATA motors. What we have to do is to find out how traders and investors of tata moors react to a piece of given information such as rise in profit in quarterly result, Suppose the rise in profit is 15% in the year 2010 and 10% rise in stock price so the analyst will look at all the previous results and then match them so he/she will have a pattern.
The analyst will study how the stock market reacted to this particular stocks in the time of crises and many more things.
these are just two examples that I gave you quants analyst analyze from 150-200 such parameters and then check them on the virtual stock market.
The most basic quantitive trading model consists of price, volatility and time. All other models have their own approach and they value many things such as liability, ROI, etc.
Risk 

There can be many risks with this type of trading but I only one.
Full disclosure I watched this in a movie(Margin call).
The plot was that the hedge fund has been packaging different types of debt instrument of several classes of rating while the base was the historical volatility index and they have been trading on margin that means if the price of their stock decrease by 10% then half of the companies profit will evaporate.
So what happens is that a rocket scientist finds out that the firm is trading on the stocks whose value is going to decrease by 25% because the analyst couldn't figure out when to sell the material they were buying.  
In a nutshell, all I am explaining is that the slightest mistake and your entire saving will evaporate.


for further enquiry call me @8595864379.

thank you for reading.

  
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