Getting Started in Quantitative Trading

So you want to be a quantitative trader! 

Congratulations you're about to embark on a fascination journey where you're going to use modern technology to extract profits from the markets. It's a fascinating topic and the rewards are amazing.

If you're ever traded before, you know how difficult it can be. The psychological issues of trading can be very challenging. When your money is on the line, rational thinking can be lost to emotional decisions which harm your account. In short, it can be a frustrating, humbling and expensive endeavor. System trading helps remove or at least reduce some of these obstacles.

​With computer aided automation, there are limitless opportunities in the trading world. On the one hand it keeps the field open for more and more concepts and ideas to be brought in; on the other it forces a stagnant dependency on computer-to-computer trading, where the quant trader’s role gets limited to building smart applications with a high risk of losses. A thorough self-assessment based on above points will assist in deciding on how to move from the mathematician/statistician qualification to the real world quant trading.

Two Roads To System Trader Success.

Which One Will You Follow?

1. System Developer and Trader​

The first road is to become a system developer and trader. This is a person who will create trading systems by programming them in a computer language and then trade those strategies. 

2. System Trader​

The second option is to be a system trader who buys or leases trading systems to trade with. This bypasses the system development process. Thus, you don't need to learn a computer language or spend the time developing trading systems.

Steps To Quantitative Trading Success

1. Mastering Your Backtesting Platform

You must pick a platform and master it. You should understand how orders are placed, how to build charts, access multiple data streams and know the little quarks that are unique to your platform.

2. Learning Your Computer Language and Discovering The Market

There is one way to learn a computer language: Using it. You have to build programs, break programs, and get skilled at how to debug code. It’s a very hands-on experience. My advice is to dive into tutorials anywhere you can find them. 

3. Backtesting And How To Do It Right

Learn to build systems that actually work! Through proper backtesting you avoid building systems that are curve fitted to the historical data, have reasonable drawdown and regularly exploit a market edge.

4. Go Deep With Advanced Topics

During this step you really should start getting a better understanding of more advanced topics including Money Management & Risk, Psychology, Position Sizing and improving your Strategy Validation process.

5. Trade A Single Strategy As Soon As Possible

I truly believe your first goal is to build a single system and trade it with a small account as possible. The point is not to make a bunch of cash, but I hope you do. Instead, your goal is to gain valuable experience in trading the live market. This is huge for both gaining practical experience and gaining psychological benefits.

6. Build A Portfolio of Trading Systems

Once you have one winning system your job now becomes adding different trading systems to the mix in order to create a portfolio of trading systems. Just like a traditional investor will diversify his retirement account between stocks, bonds, and other instruments, you’ll need to build a portfolio of trading systems across different markets and trading methodologies.

FREE Quick-Start Guide

This guide shows you what is Quantitative trading, its advantages and disadvantages. It highlights some of the common terms and explains some of the basics basics on what you need to know to get a jump-start on becoming both a system developer and system trader.

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