Tuesday, November 19, 2013

Quant trading for the masses

Quantitative Trading image
For years, quantitative trading has been reserved for the wealthy few. Wall Street's big players, hedge funds, and banks have all been able to rely upon supercomputers equipped with complex algorithms for automated trading. This allowed them to make more money than most of us ever dream of by trading hundreds of equities within a matter of just a few seconds. However, that's all about to change, thanks to a new company that is now offering quant trading for the masses. That's right, even those of us without supercomputers will now get to reap the rewards of this profitable technology.


EquaMetrics is the Manhattan based startup that is behind all of this. Many stock investors and analysts believe that quant trading for everyone (or “algorithmic trading”) is the next natural step in the evolution of trading. The 80's and 90's saw the introduction of sites like e-Trade, which allowed anyone to easily buy and sell stocks. The 2000's saw the emergence of sites that enabled anyone with a computer and an internet connection to trade options. Today, algorithmic trading is the latest and greatest thing to reach the masses.

The app that was designed by EquaMetrics is cloud based, and all you need to tap into its stock trading algorithmic power is a PC. The best part is that it's extremely easy to use (even if you aren't necessarily tech savvy). You simply drag and drop the colored tiles that are displayed in the app in order to create your very own algorithm. If you're a day trader, you can choose from 30 different variables to build your perfect formula. The options that are made available to you all revolve around tech indicators. Simply put, these technical indicators are metrics that give you the power to see trading patterns, rather than relying solely upon stock principles and fundamentals. Once you've selected all of your options, you need only run the program so that you can then begin to buy and sell stocks and currencies.

Now, let's get to the part that you've been waiting for. After all, it's nice that it does all of these things, but how much does it cost? - The web application will set you back $99 a month. However, if you want to run more algorithms, you can opt for the $250 monthly fee. This price is actually quite inexpensive when compared to the alternative (which is hiring a programmer for a couple hundred thousand a year).

With the app, there's no minimum to invest and you cannot scan stocks or currencies any quicker than once per minute. This means, that you won't have to worry too much about the typical risks associated with computerized trading (many of us remember what happened with Knight Capital last year...when they lost $440 million dollars last summer thanks to an algorithm that had gone haywire). So, at this point, it seems as though you get all of the pros of quantitative trading without too many of the cons, which is always a good thing!

+John van der Munnik 

Disclaimer:

All opinions expressed, trade recommendations/advice on this website are solely of John van der Munnik and are not affiliated with any investment firm or any other organization. You should not make an investment only based using this website VDM Trading for your trading needs without seeking help from your own financial advisor.