This is a thread on the basics of quantitative trading & the strategies it employs. To understand today’s markets, we have to understand today’s traders. Most aren’t even human. They’re finely-tuned machines, built for the sole purpose of making money. How do they do it? 1/7
-
Show this thread
-
Quant trading programs can be split into 3 parts: Data parsing: normalizing & feeding market data into your program Trading strategy: Deciding what trades to make Order entry: Converts strategy into orders that can be accepted by the exchange 2/7pic.twitter.com/5j2GHiktre
1 reply 0 retweets 0 likesShow this thread -
There are 3 strategies a quant firm can pursue: -Arbitrage: solve a market mis-pricing. -Market Taking: profit from a predicted price change. -Market Making: Provide passive liquidity and profit from the spread. I’ll explain these in more detail below: 3/7
2 replies 0 retweets 0 likesShow this thread -
Replying to @HideNotSlide
Probably depends on exchange and product, but would be curious as to the relative proportion of volumes traded across these 3 strategies?
1 reply 0 retweets 0 likes
Good question - this is my anecdotal opinion, but I think: Arbitrage is only viable for the top (ie fastest) firms, not a widely profitable strategy for all Market Taking is the "highest risk" but probably the most popular Market Making would be a close #2
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.