Quantitative vs. Discretionary Trading
Quantitative versus Discretionary Trading
The American economy affects us as well as the rest of the world, and the stock market influences the economy in a big way. Most Americans are quite familiar with terms like stocks and the stock market, especially after the economic crisis of 08, but many do not know exactly what they mean and how extreme their effects can be on the general economy. Stock is nothing more than pieces or shares of a company which are traded in a specific market. When I purchase stock in a company I have just invested in part ownership of it, usually in the hopes that I will be able to sell it later at a higher price for a profit. The price of a stock is dictated by supply & demand. This essentially means that the last price which the stock has been traded for is now the official price of that stock at that moment. Much of business in the U.S. and around the world is directly or indirectly affected by large corporations and banks, all of which can succeed or fail as a result of their stock. Securities, or tradable and negotiable financial instruments, are responsible for large amounts of money floating around our economy every day. This obviously has big implications. The prices we pay for almost anything you can imagine are subject to speculation and movements in securities markets. Commodities such as metals and agriculture are traded at the commodity exchange, where prices are set for our groceries sometimes weeks or months in advance. The stock markets can influence interest rates, monetary policy, financial and economic laws, and many other entities controlled by government agencies such as the Federal Reserve or the Securities and Exchange Commission. These markets can make people more money than they imagined in a matter of minutes, or leave somebody in bankruptcy in the same short time. Billions if not trillions of dollars change hands every day, creating opportunity and success stories, but also a breeding ground for white collar
The American economy affects us as well as the rest of the world, and the stock market influences the economy in a big way. Most Americans are quite familiar with terms like stocks and the stock market, especially after the economic crisis of 08, but many do not know exactly what they mean and how extreme their effects can be on the general economy. Stock is nothing more than pieces or shares of a company which are traded in a specific market. When I purchase stock in a company I have just invested in part ownership of it, usually in the hopes that I will be able to sell it later at a higher price for a profit. The price of a stock is dictated by supply & demand. This essentially means that the last price which the stock has been traded for is now the official price of that stock at that moment. Much of business in the U.S. and around the world is directly or indirectly affected by large corporations and banks, all of which can succeed or fail as a result of their stock. Securities, or tradable and negotiable financial instruments, are responsible for large amounts of money floating around our economy every day. This obviously has big implications. The prices we pay for almost anything you can imagine are subject to speculation and movements in securities markets. Commodities such as metals and agriculture are traded at the commodity exchange, where prices are set for our groceries sometimes weeks or months in advance. The stock markets can influence interest rates, monetary policy, financial and economic laws, and many other entities controlled by government agencies such as the Federal Reserve or the Securities and Exchange Commission. These markets can make people more money than they imagined in a matter of minutes, or leave somebody in bankruptcy in the same short time. Billions if not trillions of dollars change hands every day, creating opportunity and success stories, but also a breeding ground for white collar
Cited: Beder, Tanya S., and Cara M. Marshall. Financial Engineering: The Evolution of a Profession. Hoboken, NJ: John Wiley & Sons, 2011. Print. Narang, Rishi K,. Inside the Black Box: The Simple Truth about Quantitative Trading. Hoboken, NJ: Wiley, 2009. Print. Dunis, Christian, Jason Laws, and Patrick Naïm. Applied Quantitative Methods for Trading and Investment. Chichester, West Sussex: John Wiley, 2003. Print. Schulmeister, Stephan. "Profitability of Technical Stock Trading: Has It Moved from Daily to Intraday Data?" Review of Financial Economics 18.4 (2009): 190-201. Print. Beattie, Andrew. "The Birth of Stock Exchanges." Investopedia. Investopedia ULC, 25 Oct. 2007. Web. 21 May 2012. < http://www.investopedia.com/articles/07/stock-exchange-history.asp#axzz1wrQuV1kV> Ilmanen, Antti, and Rafey Sayood. "Quantitative Forecasting Models and Active Diversification for International Bonds." The Journal of Fixed Income 12.3 (2002): 40-51. Print. Marshall, B., R. Cahan, and J. Cahan. "Can Commodity Futures Be Profitably Traded with Quantitative Market Timing Strategies?☆." Journal of Banking & Finance 32.9 (2008): 1810-819. Print.