Quantitative Trading

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Definition of 'Quantitative Trading'

Quantitative trading is a type of algorithmic trading that uses mathematical and statistical models to make trading decisions. It is a form of automated trading that relies on computer programs to execute trades based on pre-defined rules.

Quantitative trading has become increasingly popular in recent years as the cost of computing power has fallen and the availability of data has increased. This has made it possible for traders to develop and use complex trading models that would have been prohibitively expensive or difficult to implement in the past.

Quantitative trading can be used to trade a wide variety of financial instruments, including stocks, bonds, commodities, and currencies. It can also be used to trade on a variety of time frames, from intraday to long-term.

There are a number of advantages to using quantitative trading. First, it can help to remove the emotional element from trading. This can be beneficial for traders who are prone to making emotional mistakes. Second, quantitative trading can help to improve the consistency of trading performance. This is because it is based on pre-defined rules that are not subject to human emotions. Third, quantitative trading can help to reduce trading costs. This is because it can be automated, which eliminates the need for human traders.

However, there are also a number of disadvantages to using quantitative trading. First, it can be difficult to develop and implement effective trading models. This is because the financial markets are complex and constantly changing. Second, quantitative trading can be risky. This is because it is based on mathematical models that are not always accurate. Third, quantitative trading can be expensive. This is because it requires the use of computers and software.

Overall, quantitative trading can be a powerful tool for traders. However, it is important to be aware of the potential advantages and disadvantages before using it.

Here are some additional resources that you may find helpful:

* [Quantitative Trading: A Guide to Algorithmic Strategies and Techniques](https://www.amazon.com/Quantitative-Trading-Guide-Algorithmic-Strategies/dp/0470529060)
* [The New Quantitative Finance: Investment Strategies in the Era of Big Data](https://www.amazon.com/New-Quantitative-Finance-Investment-Strategies/dp/0470529079)
* [Quantitative Trading: How to Build Your Own Algorithmic Trading Systems](https://www.amazon.com/Quantitative-Trading-Build-Your-Own-Algorithmic/dp/1118946051)

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