Learning how to trade quantitatively - Where to begin

Hello everyone (first post so here goes!).

I've been interested in the financial markets for awhile and as a more math type person I have been looking into trading using quantitative methods. I am familiar with technical analysis and charting techniques, but I am looking to go beyond that. Based on what I've read, people are able to forecast the movement of securities by using modern physics or some "high level math" (such as stochastic calculus and probability theory).

My question is where would be the best place to start learning about how to apply these subjects in the market. I'm interested in seeing how stocks move beyond just observing stochastic oscillators and using the Fibonacci sequence. Any advice? And also, what financial instruments seem to be the target? I know stocks are a given, but do people really model the movement of prices for say currencies?

Thank you in advance for your time and effort, any help is appreciated!

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Comments (6)

Jan 11, 2013

I once heard about a very secretive trader(former engineer) who could predict the exact highs and lows of EURUSD swings using the math of fluid dynamics.

Personally, I believe you should look into price action analysis. While there are hundreds of fundamental indicators that people like to think influence the price of a security, the only thing that really influences the price of a security, is what traders and investors think of it. And price action analysis is the most direct way(and thus the best way) to analyze the changing prespectives of traders and investors about the price of a security, relative to its value.

"It's not that I'm so smart, it's just that I stay with problems longer." - Albert Einstein

Jan 11, 2013

Most quant techniques are better at figuring out the relative direction of securities, rather than the absolute. You're more likely to bet that security A will outperform security B, rather than I think security A will appreciate by 40%.

What you need is data and lots of it, to build signals and the like. Your signals need to make common sense and should not be back-fitted. I doubt you're going to find anything exploitable in a book. Why would someone sell you their secrets for $20?

Jan 11, 2013

OP, you should read The Black Swan by Nicholas Nassim Taleb before you start.

Jan 10, 2013

Okay thank you for the advice guys. I'm looking into price action analysis and seeing how I can enter into a position that has a high probability of being favorable. It appears to me that since so many people follow the trends and trade upon them that the opportunities for trend followers in the stock market are becoming fewer and less profitable. Obviously I'll have to develop my own methods because like SirTradesaLot said, nobody is going to give out profitable strategies for cheap.

Also planning on looking at quantum trading, seems intriguing at best but who knows.

Thanks again!

Jan 12, 2013

I win here, I win there...

Jan 12, 2013

I win here, I win there...