Throwing cold water on quantitative trading

April 14, 2015 2 mins read
Throwing cold water on quantitative trading

Lately, more and more financial institutions have focused on quantitative trading, and small-sized investment companies have sprung up on this market like mushrooms after the rain. This has resulted in ever-increasing demand on people working in quantitative trading, including traders, quantitative strategy researchers and analysts, and people who want to set up their own quantity trading business.

Quantitative trading is an investment strategy that relies on quantitative data indicators and fixed mathematical algorithms. Quantitative trading includes algorithmic trading, automated trading and other low frequency trading strategies. In order to create a useable quantitative trading tool, you need two things: first, a fundamental trading strategy, and second, a quantitative trading platform created according to that strategy.

A quantitative trader needs a science or engineering background and work experience in brokerage, private equity or futures firms. In order to do quantitative trade strategy research you need self-confidence and the ability to remain cool under pressure. Those who want to set up their own quantitative trading business need knowledge of pricing models and trading strategies, be familiar with one of the programming languages needed to build your trading platform, such as C++, Java or Python, be familiar with sophisticated Internet servers, and be proficient in Matlab. Being strong in data structures and mathematical algorithms is also an advantage.

In the current climate, those who want to enter the field of quantitative trading should get information from friends that might be working in finance (brokerage, private equity, futures or investment firms) or from headhunters, on what skills are needed to work in this field and on what the work actually involves. At the same time, you should send out your CV and attend one or two interviews with different quantitative trading companies. This will help you find out what your strong and weak points are, and enable you to correct the weaknesses you have in your skill set.

Alan Li's picture
Alan Li
Operations Director, Greater China
ali@morganmckinley.com