What is a Quant Trader? | Systematic Investing | What is a Quant Hedge Fund? | Trading Ideas
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- เผยแพร่เมื่อ 22 ก.ค. 2020
- Todays video is all about quant trading or investing. I have been a quantitative trader for over twenty years, and one of the most frequent questions I get in the comments section of my videos is what does a quant trader or quant hedge fund investor actually do. In this video we will talk about the different approaches followed by quant traders and discretionary traders and we will talk about the typical backgrounds of quantitative or systematic investors. What is a Quant? Quant is short for Quantitative or Quantitative Analyst on Wall Street.
Patricks' Books:
Statistics for Traders: amzn.to/3eerLA0
Financial Derivatives: amzn.to/3fq8Bao
Corporate Finance: amzn.to/3fn3rvC
Visit our website: www.onfinance.org
Follow Patrick on Twitter Here: / patrickeboyle
To learn about different hedge fund strategies, check out this video: • Applied Portfolio Mana...
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You got me. I SUBBED
Already did, good sir. I came here after watching the coffeezilla conversation just some moments ago. Thank you for your videos!
Quant / data scientist and Data Engineer here. Thank you for the good explanations in other topics and recent stories (eg.: Robinhood). I have the dream of on day create my own Qaunt Hedge Fund trading firm. Maybe next a video on rise and fall of the trading firms in the 2010's?
@@corlaez same here lol
chill
HOLY MOLY that cup has alot of ice in it
thats how you keep cool when the markets on fire lmaoo
Its called "Quant Gin and ice"
When you're a hedge fund manager you can have all the ice you want !
Quant brains gotta keep cool to prevent overheating.
It’s not a glass half full, or a glass half empty. It’s a glass half iced. 😂
i came here after watching the coffeezilla interview. *thumbs up*
Thanks!
That's my quant... look at him
notice anything strange about him?
@@yousefawad8020 Look at his face, look at his eyes lol
@@MahdiKnicks That’s kinda racist
@@adamfattal468 lool my fav part
@@MahdiKnicks His name is yang. He won a math competition in China. HE CANT EVEN SPEAK ENGLISH
this is basically a huge smackdown of emotion fueled day trading
Found you from a coffeezilla interview. Love the channel. You're awakening the true trader in me and now I'm hungry AF to dig deeper into how to really operate in the market. I'm a victim and perpetuator of the day trading bullshit from gurus. Slowly learning the truth of it all. Thank you!
(can you do a style guide? My man, you dress sharp!)
Great Video Patrick! Awesome to see you've improved the audio quality in your more recent videos - brilliant investment
Great stuff, enjoying your material. I also came here after the Coffeezilla interview. I've been a retail trader for over 15 years so interested what it's like from an institution level.
A perfect description of this job. Your videos are quality, congratulations.
I think this is one of the most interesting channel for trading and investing in financial assets.
Liked and subscribed. Exactly the sort of summary I was looking for. Cheers!
great video patrick, thank you. my aspiration is to be a quant
I cannot wait for my order of your book Statistics For The Trading Floor to arrive in Singapore! Thank you for the informative content!
Hope you enjoy it!
Great stuff. I started as a clerk in the D-Mark options pit in '98, Shelly Nadelman taught his book as a course for us, it was amazing.
*Hey, Also came here form coffeezilla. I am looking forward to go through your videos. Looks like a great source of knowledge. I really like quantitative strategies.*
Hey, thanks!
Caught your videos in the recommendations and now I'm truly blessed. Thanks for the great educational content Patrick. You probably know this but I've read papers that explore the idea that underlying volatility leads usually leads to falling falling markets. Would you be able to do videos on "market tendencies" and other "cause and effect" relationships that can be observed in a market? For instance, it can be seen that volatility is correlated with asset volume. Do you know of other "principles" or market observations? Thanks again.
interesting :D
I think most peoples' problem with quant trading is not that it's bad, Patrick, but rather that it's too good. Computer algorithms extracting money from the market like, well, a machine, robbing normal investors that don't have access to these technologies every minute of every day.
Love this channel!
Geat video, you inspired me to study business. Thank you s much. I hope I come out of business school and find a job on finance.
Great content. Do a Q&A I would love to see your answers to common questions beginners have. Personally I would like to know what you think about forex trading, I am trading currency pairs and getting some additional income from it.
Hi, what software do you test your strategies on if you don't mind sharing? I assume your using some form of python or equivalent?
Great video ! PS: I like the sharp look !
thanks to this video, i realized i have been quant trading for over a year without even knowing it xD
thanks for confirming i'm not insane with my convoluted strategies lol
Great video 🎉 thanks
A bit like in many professions there seems to be 2 kinds of talk here
Mysticism: they have such magical gear and stuff and theyre sensing the world before it happens, and their mind works three times faster than yours, they have three PhDs..
Professionals: theyre systematic, careful, patient, play big but safe, of course they have fancy gear, but its still better to be quickly roughly right than a supercomplex system that points precisely wrong..
I really enjoy your videos. Question: could you do a video explaining abouy unusual options alert. I seem to see it often on news feeds from benzinga/ yahoo finance etc.
I love all your videos
Excellent insight Patrick, as a grad student studying Business Analytics that plans on transitioning into the investment world out of school do you have any suggestions on what skill sets will be most beneficial to acquire prior to job hunting?
Good thing he replies
I just bought your book statistics for traders. I am looking forward to reading it. I love statistics and have been trading for a couple of months. Hopefully it will help me.
How’ve you been doing?
How’s your trading?
I’m also interested in buying his book.
Has it helped you to earn significantly more money?
You got my sub !!!
Could you have some more videos on this subject. Above video is very informative but also very brief. Few more episodes in detail will help.
Every quant trader
'we don't rely on intuition instead we rely on quantitative analysis'
Reality
Intuition is your subconscious mind doing quantitative analysis and presenting you best possible answer without you doing the work.
Sure lol
I always assumed trading was intuitive so I stayed away from it. If there is anything I know about myself it's that I have very little intuition and no street smarts. I am analytical though...can flip around in my head systems and data. Data tells a story about human behavior...it reveals the triggers behind the changes. Quant seems to me the rational approach to trading. Am looking forward to seeing more of your content. God bless~
Thanks.
No worries!
nice bass tone at :18
Excellent content
Excellent? About content? hmmm . There is a pattern of repetion in the behavioral Investment banking, Trading and the professional amateurs who are involved themslef into that. You can also invest in crypto-if you belive in it.
This is Interesting! How would I go about learning to be a quant?
What watch are you wearing Patrick? IWC? It looks very nice.
That's a lot of ice, sir...
No matter how much ice is in your water, the lowest possible temperature will always be 0 celsius.
@@DataLog that's not necessarily true
@@projektb4rd0n53 It is.
Unless you decide to add chemicals to it.
@@DataLog or vary the pressure
@@projektb4rd0n53 Pressure has almost a non-significant effect on freezing temperature. Plus, we are talking about his drinking water, you are trying too hard to fix your mistake.
Nice suit !
Could you do a video on how AI and machine learning specifically is being used for trading?
You give it rules: observe these indicators and make buy or sell decisions, and attempt to maximize profit. Then let it analyze its own decision making in an iterative process and keep iterating. If you break it down in that way, it's no different from an AI using machine learning to optimize how to become better at a game where profits are points in a a game.
Glass is close to the edge mate. You must never move your right arm. Or is it sore?
Hello, great video, can u maybe show us some quant trading examples from the real world?
Great suggestion! I might make a future video like that.
@@PBoyle I back up this comment, would be nice to get some real examples, everything on the internet is rather abstract
I just bought your book, hope it helps me.
Love the knowledge and is there a way to stop the echo in your videos ?
Great Video! Quick question, how much programming are quant traders typically required to know? Also could you please make a video on how the workflow is aligned between quant researchers who make the model and the traders who trade on them and maybe a simple example to explain this as suggested in other comments..
It is a little hard to answer that question. A lot will depend on the firm. In truth if you are able to do good analysis, that unearths useful information, you should be employable. To get a junior role at a large firm, you need to be good enough at programming to write code that will reach into the databases of market data, analyze that data, and interact with the api of the trading system in order to automatically execute the required trades.
you don't need programming skill as Quant trader you only need adequate knowledge in mathematics and statistics and a mentor who is experienced in Quant-focused trading. Algorithmic trading on the other hands, does require programming knowledge on the side on quantitative and discretionary elements of the trading.
I love the decorative cotton inside his water glass and the way he holds his cigarette like he will rush out to smoke as soon as the video is done.
👏👏👏👏🇧🇷🇧🇷🇧🇷
That's perfect.
Thank you for the video
Hey Patrick, great video! Please remake at some point with the production value you have now. a little hard to hear you on this one, very educational either way
Is there a specific pathway you would recommend to understand, learn, and then put to practice Quant Trading?
Maybe try to get hired by a prop firm that utilize these methods,there are an increasing amount of them these days.
Aptitude in computers,coding and math it would be a huge plus.
Theres also HFT(high frequency trading) firms where you can gain relevant experience,
For understanding and learning, MIT OpenCourseware has a Quant course here on TH-cam.
I still have no idea how analyzing "data" and building a "model" amounts to returns that are supposedly superior to technical analysis which can also be programmed to trade systematically while reading the market and testing its success in the interim.
What are the benefits of doing quant trading vs Options trading? I believe they would make around the same a year with medium risk tolerance - roughly 30-40%
Quant trading is more like a technique. You can use quant strategies with options trading, its actually very common because derivatives are very mathematical in nature.
What is the game plan legend, id love to hear that 🎱
what watch are you wearing in this video Patrick?
thx, nice interview on coffeezilla, anyway whats about the ice water ? its more ice then water :)
I take my iced water very seriously.
It’s actually all water when u think about it
Hiya, Patrick. First of all great content 👍🏻👏🏻. I’m a part qualified actuary with a fairly robust grounding in statistics and modelling. Please help me gain an understanding of how much I already know which is used in quantitative finance as I am toying with the idea of getting into it. Would you be kind enough to merely name a few statistical techniques used for hypothesis testing in quantitative finance? I’ll know how much I know. Thank you, Patrick.
For understanding and learning, MIT OpenCourseware has a Quant course here on TH-cam.
Hi
I am wondering with where to start if I want to learn quant trading?
do you have recommended books?
I just subscribed to your channel!
I have a couple general questions. It sounds common for quant traders to have a PhD in math, physics, or engineering. As a clinical neuropsychology PhD student, my graduate school training includes data analysis and statistics modeling using R. That said, I’m very interested in quant trading.
1) Should I learn other programming languages or does R have all the capabilities to design quantitative trading strategies?
2) What are your thoughts on online programming courses, such as Datacamp and Coursera?
R is useful and widely used, usually when you can write code in one language it is not too hard to learn another. Python is very widely used. I don't really know if those courses are good or not. With programming people are mostly interested in whether you can write the code or not, and they usually ask programming questions in job interviews.
If you are searching for a quant trading role, the best thing you can do is to do some useful analysis, write up your findings, and then you have something interesting to show a hiring manager.
@@PBoyle Thanks for the quick response! I'm assuming that hedge fund managers (like most people) prefer NOT to read an academic scientific writing style.
Is there a standard format for writing the results or do managers just want the findings to be presented in a way that's easy to understand?
@@PBoyle this just proves there are people out here that are WAAAAAY SMARTER than me lol
Good Gossip :-)
what can it cost an individual to become a quant trader?
Guy is placed in the video so his face is near perfectly located according to Fibonacci. Becoming a quant trader is fun and exciting, good luck everyone!
Hi Patrick, I love this video and I want to be a Quant Trader.
Right now I'm a Data Analyst in a Bank, If I study statistics, python, machine learning and finance can I be a Quant Trader?
Seems like you should also learn stochastic analysis. Check out Steven E. Shreve's "Stochastic Calculus for Finance" pt. 1 and 2
I want to be a Quant- I'm in my third year of undergrad for Computer Science. What can I do?
It sounds like you are doing the right things. Read as much as you can about markets over the next year, and apply for all of the investment bank analyst training programs. The programs begin recruiting in about a month, in order to hire people to start next summer, so get your CV ready right now, and visit all of the big firms websites.
@@PBoyle any big names you can suggest, please.. thanks!
hello, Mr Boyle! In another video, you recommended the book "A Random Walk Down Wall Street" by Burton Malkiel. In that book, Mr Malkiel suggests that the market has essentially priced in all publicly available information in any given stock's price at any given moment in time. If we presume that to be true, upon what basis would a typical retail investor be able to make any intelligent decisions about what stocks to invest in beyond pure instinct?
In other words, are there variables in a stock's price that might not be subject to the axiom above that might make is possible for retail investors to make a reliable profit on? Or is any potential profit purely speculative? And related to that, do retail investors really have any reasonable chance to actively trade in a way when at significant structural disadvantages to institutional investors, such as information deficits, access to incredibly high speed trading platforms, physical proximity to exchanges, etc, etc?
Hi Patrick, question for you. If a retail trader uses technical analysis in a discretionary manner, looking at things like support and resistance and trend, is this honestly back testable? It seems to me that back testing could only be accurate if A) your sample size is large and B) your entry and exit triggers are very "mechnical", to the extend you could write IF/ELSE statements in code. Sorry if that's vague, but for example how can one back test an ascending triangle breakout, you would have to define strict and robust set of parameters right? Such as "if the price reaches the price resistance of X, Y amount of times, while making "higher lows", while maintaining an increasing volume average.... You see where I'm going with this, I want to apply a very systematic approach to trend following and price action trading, but I don't know how naive that idea is.
yeah that is back testable, the problem with so many technical analysis strategies is they in theory are back testable but no one uses them as hard rules.
It's only backtestable if you make clear, quantifiable rules, which can be tough. I did tons of backtesting years ago and almost no technical indicators beat buy-and-hold with less risk. And if they did, they'd usually stop working well in real time. I think people (both gurus and so-called experts on forums) push these discretionary smorgasborg styles (you have to check Fibonacci levels, 6 different time frames and tea leaves) because they can't be tested or disproven. I've asked MANY to show me their trading results (account statements) and none will
no need to back test, ur broker will get rich, those quants will too by building algos front-running u. its not gonna work if its just u memorizing some charts, cuz algos will do better than u at it
@@johnp7739 That they invoke Fibonacci here just screams voodoo to me (as if the rest didn't, lol). I've done a lot of math in my time, and I see no reason whatsoever for Fibonacci to have a meaningful relationship to these charts.
Do you recommend any services that provide quant statistics?
Patrick, is it cold in the room? Your water seems to be freezing over. Seriously though, I appreciate your videos. Perhaps you would consider one day a spin-off for more experienced traders.
Thumbs up.
Can retail traders do this? How would one get started down this path?
Hi, I am currently working on testing Algorithmic / Quant Trading algorithms. Would you be kind enough to recommend any reading material and software's for quantitative trading. Thanks,
I was expecting more of response not a like on my comment .
You’re welcome
So what kind of advantage would someone have that doesn't use this strategy? More knowledge in the kinds of businesses or the kind of markets they are investing in for example? I don't quite get how you would do any analysis without data science
I have subscribed and I find your talks insightful and compelling. No dissing .Just a straight question that irritates me. Economics and Finance can never be a science. There are too many irrational human variables and we cannot conduct triple blinded randomized gold standard trials. It’s also the case that economic and financial equilibriums do not exist because they are models that rely on ceteris paribus. Further many models rely on linearity when in fact the markets are exponential. So , in natural science such as physics, mathematics we have a hypothesis that can be tested and used as a prediction based on equilibrium. Something equals something else. Cause= Effect. In that case why oh why do we try and use mathematics to try to figure out inequalities where there will always be no predictive value and no science ? Yes it may be a random walk and yes we have Brownian motion which is an aberration of the heat on molecules equation but application of a pure physical experiment of three variables onto a sector that has trillions of variables appears like financial engineers are just trying to put silk wrapping paper around a pigs ear. Markets can never be predictable for that reason.
Amazing work Patrick 👏🏻👏🏻👏🏻 A fresh take on systematic trading, which really stands out from the available content on TH-cam (Also, thank you Coffeezilla ❤️)
Question for you - Is there a path to learning quant / systematic trading on our own prior to joining a firm? Embarrassingly, I've finished a few courses on pyfinance, algo trading & quantopian and I feel like I'm falling deeper into a bottomless abyss. It's incredibly fascinating, yet so hopeless at the same time 😂
Do you know someone who has learnt quant trading on their own and now works for a firm or is consistently profitable?
Thanks again for the amazing content ❤️
As dumb as this sounds, just come up with ideas that interest you and test them out. If you do this you will be more of an expert than a lot of industry professionals. I started out by simply testing out all of the ideas that people accept as true in markets. Do low P/E stocks outperform? Do trending stocks continue to trend? Do stop losses improve your risk profile.
If you just follow your curiosity, you will never get bored with this stuff.
@@PBoyle words of a true professional 👏🏻👏🏻👏🏻thank you PB, will start playing with simple ideas!!
Could you do a video where you analyze ai crypto trading bots?
I definitely find strategies founded on reproducible logic far more reassuring than human intuition!
Sounds like something I could do.
A video on forex trading?
Does Quant trading generate a lot of taxes, since it's short term investing?
at 2:44 lol quants doubt their own work- so true
What was your college major? Did you go to grad school?
👍
Thats cup has a lot of ice, england must be hot haha
Where can I contact you sir
GPS satellites use time.
Bruh the ice in that glass
Love your videos, but looks like your glass of ice started to melt 😀
That iceberg in the glass of water sunk the titanic
My strategy
Buying stocks on a weekly and daily breakout out of base with very high volume.
Stage 2 trend stock in outperforming sectors.
above 13 ema 21 ema 50 sma 200 sma
Bluechip stocks over $ 25 with great metrics in hot sector
Outstanding performance return weekly, quartely year to day
EPS growth q over q
Sales growth q over q
10% institution owned
Liquid stocks with beta over 1.2
Holding time 3 days to 6 weeks
Do you think is possible to get an algo to trade this strategy automatically? and to backtested with an algo?
I have backtested this strategy by hand and what I found out is that my winning ratio is 45% .
Risking 1R to get 3.5 given the conditions we are in a ok market enviroment.
What are your thought sir? THANK YOU!
I looked at the previous comme ts and no one asked that question
You can set up some blanket to reduce echo :)
I have made some improvements since this video, hopefully the newer ones sound better.
💸💸💸
ice ice baby
I need an internship. Help!
Ice Britannica
Hello
Why would a quant trader be doing forwards? That is not an investment strategy.
Impressive how many ice is in this glass
i cant stop staring at all the ice in his glass
Hi Patrick, do you think quant trading is something one could reasonably do as a retail trader, given some prerequisite software engineering & statistics skills?
I'm a CS student and in my free time have started developing my own trading platform that is modular (i.e. exchange/market agnostic) and allows live trading, paper trading and backtesting in the same package. The prospect of having my own platform which allows fast iteration through different ideas and inefficiency tests in a variety of markets, and the statistics knowledge to do it properly, really excites me and seems like it could become worthwhile one day.
Is there any merit in following this path, and if so do you have any tips for a retail quant trader? Or am I just deluding myself like the majority of day traders and would be better off putting my work and skills in this area out there and trying to get a job in a finance firm after graduation?
Hi, it sounds like you have the right skill set to do this. One piece of advice would be to make sure you are taking transaction costs into account in your analysis, as that is often what trips people up.
The fact that you have done all of this work, would put you near the front of the pack when applying for trading jobs at the big firms. I think that once you have adequately tested your trading ideas, it is very reasonable to start trading. In addition though I would recommend that you apply for roles at investment banks and hedge funds, as you would probably learn a lot in those roles.
I'm not sure when you are graduating, but if it is this year, right now is the time to apply for the training programs at the big investment banks. If you are not graduating for another year or two, you should apply for summer internships.
@@PBoyle Hey thanks for your reply!
Yes, transaction costs is what I'm already doing, along with overlaying the hypothetical orders onto historical trades to sort of simulate effect of liquidity on the execution. What I'm probably most uncertain about is whether I'm focusing on the right market (cryptocurrencies) in terms of both my financial goals (short term profitability with low volume) and useful skills and experience.
I should have my bachelor's by next summer, applying specifically for quant jobs to learn more certainly sounds like the reasonable thing to do.
@@UNNAM3D82 Interested on how you got on
Calls on your channel.
Is there such a thing as a retail quant trader? do those people exist? another question is can someone become a quant trader without having no education and by just reading and studying finance and math on their own?
i'm starting to do this myself actually. There's no reason you can't self teach quantitative finance as long as you have patience, discipline and ability to support yourself financially while you learn.
me...sort of. im not as mathematical as a firm
We should change "If you don't understand it, then stay away" to "If you don't understand, then educate yourself."