To briefly describe the concept of quantitative trading, it is actually an investment method that relies on computer programs to implement investment strategies. Just like in the financial field, there is a very famous trading strategy, namely momentum trading. This strategy It will help users buy when the stock price rises and sell when the stock price falls. The main role of quantitative trading is actually to overcome some of our weaknesses as human beings. We must know that our time, physical strength, and energy are limited, so quantitative trading has become a feasible way to invest in the currency circle. So what exactly is digital currency quantitative trading? Let us analyze the advantages and disadvantages of digital currency quantitative trading for everyone.
Comprehensive analysis of the advantages and disadvantages of digital currency quantitative trading
The advantages of quantitative trading can be seen from quantitative trading is Some of them are obtained, mainly including:
1. The investment performance is stable. Because the quantitative trading performance is usually based on the accumulation of profits generated by many high-probability events, and only those who meet its requirements can enter, just like the college entrance examination. You can only be admitted if you reach the admission score. After multiple steps, you will be checked layer by layer. This greatly increases the success rate. While it doesn’t guarantee that you’ll make money all at once, it can be certain that you’ll make money over a certain period of time. That is, it wins by chance.
This is mainly manifested in two aspects: one is that quantitative trading continuously mines historical laws that are expected to repeat in the future from historical data and makes use of them; the other is relying on a group of stocks to win, rather than one or Several stocks won. From the perspective of the portfolio concept, it is to capture the stocks with high probability of winning. rather than betting on individual stocks.
2. It can overcome the weakness of human nature and realize rational investment. Helps you stay rational in easily irrational situations; thus being able to seize the moment when the market is overreacting and irrational.
3. Strong information processing ability. Personal transactions go through the securities market, and will inevitably feel very at a loss for various information in the market, and quantitative transactions have a stronger ability to process information. When we look at the securities market, it feels like the ocean. In the vast ocean, if we want to continuously obtain returns, we need a guide. And this guideline is our trading model, just like GPS when navigating the vast stock market.
Of course any trading system can be perfected, but it is not perfect. Quantitative trading also has its shortcomings, mainly:
1. The profit of each transaction is relatively small, so it can provide There are not many varieties with high liquidity and volatility.
2. Each quantitative transaction has to pay the spread or commission. And these fees are fixed, the shorter the time period, the smaller the profit margin of the system.
Basic Principles and Applications of Quantitative Trading
You may already understand the concept of quantitative trading in this example. Next, I want to talk about what quantitative trading really means, and what it really has to do with investment banks. In short, the role of quantitative trading is to use advances in computer technology and financial theory to help us overcome human weaknesses so that we can make better decisions when investing.
What is the weakness of human nature? As biological individuals, investors cannot avoid a weakness: our time, physical strength, energy, attention, and judgment are very limited. For example, with traditional methods, where each security is carefully analyzed for its fundamentals or technical patterns, even a stock market leader like Buffett can only analyze a small portion.
So, after the asset-heavy industry emerged, fund managers started to feel uneasy and then started to wonder if there was a feasible way for one person to research more securities and then manage more Funding? This idea has not been realized.
All of the above is a comprehensive analysis of the advantages and disadvantages of digital currency quantitative trading. To sum up briefly, quantitative trading is an investment model that finds the law by mining a large amount of data, and then uses this law to perform automatic calculation and decision-making, so as to obtain relatively high returns. Investment banks have invested a lot of resources in promoting the development and application of quantitative technology, and even many invested banks have huge quantitative trading funds and departments; we must know that quantitative trading also has its conditions of use, we must pay attention to Changes in the market, when the law is relatively stable, you can get relatively large benefits.