Definition
Quantitative Trading
Quantitative trading is an approach that uses mathematical models, statistics and computer algorithms to identify and exploit trading opportunities, replacing discretionary judgement with systematic, data-driven rules.
Indian quant trading spans systematic equity, futures and options strategies built on factor investing, statistical arbitrage, trend following and execution research. Strategies are developed through backtesting, validated out-of-sample, and deployed via algorithmic trading infrastructure with strict risk controls.
The discipline emphasises repeatability and risk management over individual market calls. Edges are usually small but consistent, harvested across many positions and time. Indian quant funds and prop desks compete on data quality, model robustness, execution efficiency and the ability to avoid overfitting.
Related terms
- Algorithmic TradingAlgorithmic trading is the use of computer programs that follow pre-defined rules on price, timing, quantity and other variables to place and manage orders automatically, with little or no human intervention per order.
- BacktestingBacktesting is the process of simulating a trading strategy on historical data to estimate how it would have performed, including returns, drawdowns and risk, before committing real capital.
- Quant FundA quant fund is an investment fund whose security selection and portfolio construction are driven by quantitative models and rules rather than by a manager's discretionary judgement.
- Factor InvestingFactor investing is the systematic targeting of securities with specific measurable characteristics, called factors, that academic research has linked to higher long-run risk-adjusted returns.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.