What does quantitative investment mean

Quantitative investment refers to the use of modern statistical and mathematical methods, the use of computer technology to carry out transactions in the way of securities investment. The quantitative investment from the huge historical data in the sea selection can bring excessive returns of a variety of "probability" events to develop strategies, with quantitative models to verify and solidify these laws and strategies, and then strictly implement the solidified strategy to guide the investment, in order to obtain can be sustained, stable and higher than the average return on the excess returns.

Qualitative investment originated in the stock market in the 1970s, and has since rapidly developed and spread, especially in the futures trading market, where programing has gradually become mainstream. Some data show that futures programmed trading in mature foreign markets has accounted for 70%-80% of the total trading volume, while the domestic market has just started. Traders' emotional volatility and other drawbacks are increasingly becoming an obstacle to profitability, while programmed trading is naturally made of precision, 100% execution rate for its profitability to bring the advantage.

The advantages of quantitative trading:

1. Strict Discipline

Quantitative trading has a strict discipline, so that we can overcome the weakness of human nature, such as greed, fear, and fluke, but also to overcome cognitive bias. Every decision we make is justified, especially when supported by data. The system displays a comprehensive evaluation of the stock being selected at the time compared to other stocks in terms of growth, valuation, capitalization, and timing of buying and selling.

2. Complete systematic

Complete systematic performance in the multi-level, including in the broad asset allocation, industry selection, select individual stocks on three levels we have models second is multi-angle, quantitative trading of the core investment ideas, including the macro-cycle, market structure, valuation, growth, earnings quality, analysts earnings forecasts, market sentiment and other perspectives.

3. Proper use of the idea of arbitrage

Quantitative trading is precisely looking for valuation depressions, through a comprehensive, systematic scanning to capture mispricing, misvaluation of the opportunities brought about. Qualitative investing spends most of its time figuring out which business is a great one, the one whose stock could double. Unlike qualitative investing, quantitative investing spends most of its energy analyzing where the valuation depressions are.

4. Winning by probability

This is manifested in two ways, one is in quantitative investment in the history of mining is expected to be repeated in the future of the historical pattern and to utilize. The second is in the actual operation of the stock process, the use of probability analysis to improve the probability of success in buying and selling.