What is Quantitative Trading?

Some time ago I did a series of posts that I called Quantitative Trading. The idea was to describe, in very brief terms, what quantitative trading, or system trading, is all about. That series was broken into seven parts, Which should give you a pretty good idea of what quantitative trading is all about and how I approach it.:

Part 1: Introduction - just what it sounds like... it was really the kick-off post for the series.

Part 2: Benefits - ...Describes why I trade this way. There are lots of good reasons to trade systematically. Confidence, Simplicity, Less Emotion, Profits and Consistency are just a few which I mentioned in this post.

Part 3: Types of Systems - ...Provides a brief description of the most common types of systems traded. Trending and Mean Reversion systems seem to be the most popular, but there are MANY systems based on a huge variety of data. The big question for system developers is... can you find a repeatable pattern that you can profit from? Many times this has to do with market conditions, fundamentals, or a host of other criterion.

Part 4: Development Philosophy - When developing a trading system, it's important to embody characteristics that fit the individual trader. In this post I describe what's important to me in a trading system.  You can decide what criteria is important to you.

Part 5: Software and Data - Quantitative Trading is all about analyzing data... and there are many choices of data sources and the software to analyze it. In this post I give my take on data, and the software I use to make sense of it all.

Part 6: Backtesting - This post provides a brief overview of backtesting and some of the pitfalls to watch for. Testing systems in the past is important, but we should always remember that the past is not the future. Testing, and the corresponding results, should be absorbed carefully and thoughtfully.  This post is more about what NOT to do.  To see what I do, read the series on results.

Part 7: Analyzing Results - ...Is an attempt to describe what is important to me when analyzing the results of my system tests. It's a simplistic summary, and really more of an overview. I have another entire series of posts about analyzing results, using my own MultiStage v7 Trading System as a model.

This series of posts is not likely to make you an expert in developing and implementing trading systems. But hopefully it will provide you with an idea of what quantitative trading is all about, and some of the thought process I use in my own development.

Good Trading...