Otherwise known as “algorithmic” or “automated” trading, quantitative trading strategies has seen interest soar in the last few years. Based around a system that uses electronic platforms for trading finance, it has been well received due to the dirt cheap set-up costs. Alongside the cheap costs to get going is also the ability to automate your trading strategies.

Indeed, quantitative trading has become a legitimate business for many traders around the world. The service is currently used quite regularly by active traders and investment firms to try to predict the potential results of future trading strategies to be implemented.

The reason this is so popular is that the trading process, because it is done through an automated electronic process, has a strict set of rules and guidelines. Things like the quantity, the price and the timing of each trade can all be used to create an extremely easy to manage automated trading system. It has proven to be a really successful system for staggering large trade volume over small periods of time.

It allows companies to balance the market and minimize the chances for error, creating a strong risk management plan. As well as helping the market move more fluidly as the trading is done automatically, leaving no human error to cause issues or delay trades.

One big benefit of quantitative trading is that it helps to optimize the cost of market dealing for everybody. This means that fewer resources are wasted on trading/employees, and more market can be monitored and traded with very little human interaction.

By saving hours of calculations, these automated trading machines are divvying up huge trading orders into smaller, more manageable and less risky chunks camouflaging large positions being entered or exited from large firms. To save time, large trades would be entered as one order, but today this is no longer the case. With these automated algorithms acting every bit as decisively as a fully trained market maker with years of experience, this camouflage type of trading systems make it much easier to manage trading market and is now the industry norm.

The creation of quantitative trading has in itself created new trading opportunities. This is why you will find so many different quant trading platforms being offered by financial outlets today. Because it can deal with so many different trade orders at once, it can create more than one trading opportunity at the one time – allowing for a vastly superior trading technique and results. These techniques are helping companies create entirely new revenue streams and get involved in trades they never would have done so in the past. It is safe to say that quantitative investing systems are a massive step up in efficiency, quality and overall output when compared to a normal broker.

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Chris Vermeulen