Quantitative Investment Management – The Smart Approach
Understanding the stock markets is certainly not something you are going to do with a few weeks or even years of practice. The learning curve in any quantitative investing management system is quite steep and you will, of course, make mistakes on the way. However, if it is beginning to cause you serious financial dilemmas then you need to find a more intelligent approach to becoming successful.
Otherwise known as absolute return investment, quantitative systems are built to be a low stress and high yield strategies. If, by the way, you have ever been told to “always trust your gut” then believe us when we say that is the worst advice you ever put into action!
The most basic way to look at a smart market strategy is to buy low and sell high, but our gut informs us to make potentially huge risks to cash in big and get out fast. However, although you see people making huge sums going with your gut, you don’t see the huge amount of people who crash and burn due to the excitement of it all causing them to lose control.
Getting into quantitative investment management is all about taking your gut out of the decision making process. Replacing your instinct will be a dedicated and intelligent computer system that will let you put your teachings into the right place. You need to have the right tools, but you also need the right advice – ensure that you are getting the best advice you can from experienced veterans who have a steady track record. They can’t make money for you, but they can show you how.
The quantitative investment approach involves a lot of analyzing and putting together a lot of components that make up any different investment strategy. The market will be dissected by the software and it will try and give an accurate representation of the stock current form – is it up, or is it down?
The computer tries to take all of the emotion out of the system, something other trading systems like an algo trading system cannot do. By following strict emotionless calculations, you can create a streamlined process that fits your exact needs. The results tend to be far more accurate than what your gut or what history tells you.
Quantitative investment requires more than just this, though. You will need to select what equities are the best for you to invest in, and you need to know where the best investment opportunities for you personally lie.
Things like mutual funds can have a lot of poor solutions mixed in with all of the good equities you could get involved it. However, the quantitative investment management approach finds the best of the bunch and gives you a portfolio of equities that are doing well and improving. It will then keep an eye on the entire process for you, to ensure that you have everything under control entirely and you know when to get in or out.
This low-stress method takes out any of the big potential high risk/high reward strategies that many traders get caught up in. it also helps you minimize your losses and if they are to be losses, how much you actually are going to lose.