Quantitative Investing – Madness or Misunderstood Genius?
For as long as the markets have been open, the markets have evolved and changed constantly between ideologies and philosophies. One of these philosophies that has been around for a while now and has been very successful is quantitative investing systems.
Seeking to try and reduce the potential damage that can be caused by human error, and also to help take out emotion and instinct from decisions, quantitative bases its decisions purely on the information it has. Taking out things like experience, gut feeling, déjà vu and good luck, it looks at the pure facts of any investment opportunity and what the facts actually say about it.
It offers a more rigid use of mathematics and equations to come to a solid conclusion. It looks to scan data patterns in investment patterns to come up with potential deals and great investment opportunities. While it may sound like a little bit overkill, almost a form of cheating to some, the power of technology is constantly around us.
One of the best quantitative trading systems is by AlgoTrades which is designed for casual Investors
Every time you use just about any appliance in your house, you are turning on a series of complex algorithms and equations in effect. It makes sense that something as important to people as their money, specifically investment money, is kept safe and protected by using as many fail safes as possible.
Of course, traditional investors still have a huge part to play in the investing world, and they can further augment themselves with the assistance of technology to be even more use to their clients. However, it is hard to deny that the impact on the market in general has been massive.
Quantitative investment management looks to really analyze important figures like price behavior, and trying to find the conclusions why the stock is jumping up and down throughout the day. The statistical evidence provided lets you see whether you stock has been moving up or down more regularly, letting you see the activity and the volume behind every single move in that particular market.
The statistics are extremely useful in calculating the difference between a potential gold mine and a flat out risk. It also helps take out all of the context and reasoning behind the decision to buy or sell – it just gives you the figures that you need to make that decision. Because it offers such a real-time equivalent to other analysis methods out there, quantitative trading systems gives you all the knowledge just as it actually becomes useful anyway. As it will track when a market is beginning to steadily grow anyway, you can stop wasting hours on research and make the jump when the bandwagon is starting to pick up pace.
This lets a quantitative investor pick up all of the information in one handy location. It lets them see the opinion of the entire market, in effect, and create a much more comprehensive and informed buy/sell decision.