When you are sick, you don’t need to know medical skills or find a professional doctor. To replace the battery of your mobile phone, you don’t need to remove the circuit board yourself and hire a professional repairman. There are many things for which you can purchase the services of a professional, but there is one exception, and that is making money. Making money can only be done by yourself.
Why should you trade by yourself instead of buying a quantitative fund directly? See my answer above. This answer will not be repeated, but will focus on how to do quantitative trading by yourself.
CTA Strategy for Commodity Futures or Stock Index Futures
This type of quantitative trading mainly uses trend following strategies, which is relatively easy to do. There are quite a lot of ready-made code materials on the Internet for this strategy. Although the performance is relatively average, it is generally profitable in the domestic market. You can also add your own understanding and make modifications. Moreover, this type of strategy does not require strong coding skills. There are ready-made quantitative platforms, such as Wenhua Finance, Trading Pioneer, etc., which use the simple language that comes with the software. Even those who have never been exposed to computer programming, pure liberal arts students, and pure art students can learn it quickly.
Exponential Enhancement Strategy
Index enhancement strategies are often used by foundations. The most important part of the index enhancement strategy is factor investing, which means we select a portfolio of stocks that can outperform the index through certain standards. In decades of overseas history, people have summarized four major factors that outperform the index: value, which means that companies with low price-to-earnings ratios can outperform companies with high price-to-earnings ratios. Quality, that is, companies with good cash flow and low debt ratio can outperform companies with poor cash flow and high debt ratio. Size, that is, small-cap stocks can outperform large-cap stocks. Momentum means that companies that were strong in the past will outperform companies that were weak in the past in the future.
However, these factors seem to be on the verge of failure since they were summarized. In particular, the value factor is actually related to the technology cycle and the liquidity cycle. When big technological revolutions occur, value factors often underperform. For example, after 2008, the value factor has continuously underperformed the growth factor for more than ten years because of the mobile Internet revolution. In addition, value/growth is also related to liquidity. Loose liquidity means stronger growth performance, and tight liquidity means stronger value performance. Therefore, factor investing can be very simple or very complex. You need to judge when this factor will work.
If you do this alone, the requirements for coding ability are not high. If the frequency of position adjustments is low and you don't even need a professional quantitative platform, you can find data software such as Choice and be able to write Excel functions or Excel VBA programs to develop and backtest strategies, and then execute them manually. For those with slightly higher technical abilities, you can find some professional quantification platforms based on Python.
High Frequency Trading
The requirements for high-frequency trading are relatively high. For example, Huaxin Securities currently has a self-operated team with the best quantitative strategy in the country, and is often on the dragon and tiger list. Institutions have an absolute advantage in this area, and it is not recommended for individuals to do it. First of all, this strategy requires the use of Tick-level data for development and backtesting, and Tick-level data needs to be purchased for a fee, and is more expensive for individuals. Secondly, due to the speed requirements, implementation requires a dedicated hosting server, which is too costly for individuals. Not only is the cost high, but it also requires high personal technical skills. C++ is a basic skill, and memory databases must also be mastered proficiently. People with this technical ability are completely qualified for development positions in major Internet companies.
However, I have to say one more thing. There is a big difference between quantitative strategy and subjective strategy. The quantitative board-making strategy is more of a mechanical use of the market order following strategy and the leading and lagging individual stock linkage strategy. There are many things that need to be analyzed in subjective analysis. Many of the strategies of large hot money cannot be fully quantified.
Finally, it is better for individuals to do quantification in their spare time than to work in an institution to do quantification.
Going to work in an institution, doing quantitative work, and having to produce results in a short period of time will bring career risks. As for individuals who do quantification, as long as they are not doing quantification full-time at home, they can slowly study it and study strategies while working. When the research is completed, they can increase their income. If the research cannot be completed, no one will urge them, and they will not be very anxious. . You know, Simons, the world's top quantitative investor, made no money in the first ten years of trading, and it took ten years for him to truly achieve stable profits.
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