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Quant traders are people who use mass amounts of data to make quick, informed stock trading decisions. Computer-aided algorithmic trading and high-frequency trading produce tons of data — quant traders mine that data to identify opportunities, develop trading strategies and drive profit in seconds using their own computer programs. They’re practically human computers.
Quants need deep mathematical knowledge, programming expertise, trading experience and more skills to be truly great at the job. If you want to become a quant trader yourself, these are the skills you’ll need.
The existing models are fine, but good quants look at the market and algorithms with an improvement mindset. How can you make these even better? Be creative, be innovative and be willing to make decisions that seem odd in the moment but will pay off down the road.
Naturally, quants need to be great at quantitative analysis and math. Researching data, testing results and implementing trade strategies all require a firm grasp of mathematical concepts. Quant trading moves practically at the speed of light and you need to be crunching numbers nearly as fast as the computers do. Even small mistakes can cost you big in real dollars.
To be a good quant trader, you should know how to program. Quants have to be familiar with data mining, research, analysis and algorithmic trading systems. Knowing how all of these programs work is one thing, being able to build them yourself is another entirely. Among the most commonly used programming languages in quant trading are C++, Java, Python and Perl, while tools like MATLAB are also valuable.
Automated programs can analyze the available data and make purchasing decisions for you automatically but, like any investor, becoming successful takes risk. Predictive modelling and algorithmic trading lessen market risk but it doesn’t eliminate it entirely. Likewise, if your automated trading program is set up to only make safe decisions, you may be limiting your potential returns. Risk-takers reap big rewards.
Good quants can develop their own trading strategies and models from scratch. Using established models is great, but if you’re trying to get hired, you have to show some creative initiative. Understanding trading concepts is an important element of being able to design your own strategies.
If quant trading sounds like it might be for you, then check out QuantInsti®: The Quantitative Trading for Beginners Bundle. QuantInsti is a pioneer in making educational resources available to aspiring quants and is run by market practitioners with more than 40 years of experience. This comprehensive training will get you up to speed with quant trading, and it’s available now for $49.