Quantitative trading has been carried out in the United States for more than 30 years. The most famous is the mathematician Simmons and the medal fund of his Fuxing company. Since the period of 1989, the average annual return rate of Medalian Fund of Fuxing Technology Company is as high as 35%, and Medalian Fund is considered as the most successful hedge fund.
Quantitative trading in a narrow sense is a programmed trading that began more than ten years ago. It is to use computer language to compile the trading methods used in the trading process into computer software programs to realize machine stock selection and automatic order trading. Computer programs can save some labor costs (human analysis is slow, after all, there are more than 4,000 stocks on the market now, and there will be more in the future), and at the same time, it can save some traders unnecessary market-making time, and can also avoid the influence of emotional and psychological factors to a certain extent.
In a broad sense, quantitative trading is a systematic trading used by our traders in the trading process. According to some fixed trading patterns, systematic trading is the premise of stock trading profit. For example, the fundamental value investment method quantifies many financial data and indicators into a fixed model, which belongs to fundamental quantification; People include various indexes compiled by technical analysis theory and stock selection conditions, which belong to technical quantification;
In addition, quantitative trading can be divided into algorithmic trading (that is, high-frequency trading, mainly used to grab orders), arbitrage trading (inter-futures arbitrage and inter-futures arbitrage), automatic trading by computer programs compiled according to various existing technical analysis theories, and so on.
Quantitative trading is not a guarantee of profit, and it must be based on a certain success probability model before it can be applied to actual trading. As we all know, the casino's profit is actually higher than the player's profit probability 1%, which ensures that the casino will win if it bets for a long time. Therefore, the actual pursuit of quantitative trading is a higher probability of profit than most people in the market 1%. But this 1% is not something that ordinary investors can do. It needs a lot of actual combat summary and resumption summary, and finally forms the so-called quantitative trading model.
Finally, remind investors that the quantitative trading mode mainly comes from the following two modes:
1, data mining, looking for a model with high profit probability in the past history from historical data, which is generally a black box model, that is to say, only the results can be seen, and the logic is not known. For example, the popular machine learning model is a typical black box model. Its disadvantage is very obvious, that is, you don't know the profit principle. What is the probability that you can continue to meet the above model in the future? In other words, this model has a very good historical performance, but whether it can be profitable in the future is very uncertain.
2. Based on the profit model of subjective traders, according to the systematic trading method of profitable subjective traders, the trading program is compiled with computer language. Some of this trading model can be quantified, and some can't. If there are many quantifiable parts, there is a high probability that the historical data will be profitable after quantification, then there is a high probability that it can be used for firm offer. Unfortunately, this model is rare, but it is hard to find. The other is that a few parts can be quantified, and most of them can't. The quantified parts perform poorly in historical backtesting, and most of the profits of subjective traders may come from subjective judgment, which accounts for the vast majority. For example, in Xu Xiang's hit board model of the daily limit death squads, the daily limit buying can be quantified, but if it is only the daily limit buying, it will not be profitable. The reason for greater profit lies in the so-called sense of disk, so the key of this kind of model is to quantify these sense of disk.
To sum up, quantitative trading is only a small branch of trading, not a profit method. Don't be superstitious about so-called quantitative trading.
In fact, systematic trading is the key, and the key to systematization is to quantify and objectify subjective trading as much as possible. Good luck with your investment!