Quantitative Trading


DEFINITION of 'Quantitative Trading'

Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify trading opportunities. Price and volume are two of the more common data inputs used in quantitative analysis as the main inputs to mathematical models. As quantitative trading is generally used by financial institutions and hedge funds, the transactions are usually large in size and may involve the purchase and sale of hundreds of thousands of shares and other securities. However, quantitative trading is also commonly used by individual investors.

BREAKING DOWN 'Quantitative Trading'

Quantitative trading techniques include high-frequency trading, algorithmic trading and statistical arbitrage. These techniques are believed to contribute to increased market volatility because of the rapid-fire nature of their trading and extremely short investment horizon. Many individual investors are more familiar with quantitative tools such as moving averages and oscillators.

  1. Manual Trading

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  2. High-Frequency Trading - HFT

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  3. Statistical Arbitrage

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  4. Algorithmic Trading

    A trading system that utilizes very advanced mathematical models ...
  5. Quant Fund

    An investment fund that selects securities based on quantitative ...
  6. Quantitative Analysis

    A business or financial analysis technique that seeks to understand ...
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