Re:A summary of what quantitative trading firms do
by dsacco on Sunday January 21, 2018 @09:03AM
(#16198068)
To put it succinctly:
1. All trading strategies profit by identifying market inefficiencies.
2. Market inefficiencies occur (in general) when the price of a security is inaccurate.
3. By correcting the inefficiency, the strategy profits consistently until there is no longer a counterparty willing to take the trade at that (inefficient) price.
1. All trading strategies profit by identifying market inefficiencies.
2. Market inefficiencies occur (in general) when the price of a security is inaccurate.
3. By correcting the inefficiency, the strategy profits consistently until there is no longer a counterparty willing to take the trade at that (inefficient) price.
This process is broadly called price discovery.