In the investment world, many people initially buy and sell based on their own judgment—reading the news, studying technical charts, and tracking fundamentals. However, as the volume of market information continues to grow, the human brain has become unable to process the vast amounts of data quickly and make the best judgment. This is where algorithmic trading and quantitative trading become powerful tools for investors.
What are algorithmic trading and quantitative trading?
Algorithmic trading: Using computer programs to automatically execute buy and sell orders based on pre-set rules. For example, when the price breaks through a certain moving average, the system will immediately buy, requiring no human intervention.
Quantitative trading: A step beyond simple algorithmic trading. It uses mathematical models, statistics, and big data to design sustainable and profitable strategies. It also uses historical data backtesting and optimization to continuously improve the stability of these strategies.
Simply put, algorithmic trading lets a computer "execute the rules for you," while quantitative trading lets data and models find the rules for you.
