# Quantitative Trading – What it is, definition and concept | 2023

In this way, this type of trading uses only that information that can be represented by numbers, in tables or graphs, that is, of a quantitative type. For example, the value of the unemployment rate of a country or the evolution over time of the price of a share.

Therefore, the qualitative aspects, that is, not measurable, are left out. Thus, bad news that affects the price of a share cannot be represented by numbers. In this case it will not be taken into account for investment decisions.

We are going to see how one could work through quantitative trading, with a process similar to the one that would be followed for any type of economic analysis. The steps would be the following:

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1. Data collection. We must obtain the values ​​of the different variables that we are going to analyze. For example, the gross domestic product (GDP) of the country in a period of time and the price of a given share.
2. Data tabulation. Once collected, we must take them to a table for further statistical treatment. In this case, a spreadsheet is a great tool.
3. Data modeling. With the tabulated data, predictive mathematical models can be created. For example, what relationship does GDP have with the price of shares? At this point, graphs are very helpful.
4. Feedback or feedback. Once launched, you have to test it and see if it works. Otherwise, corrections will have to be made.

## Technical analysis and quantitative trading

Technical analysis is a way of operating in financial markets using charts such as Japanese candlesticks or certain numerical indicators, with the aim of predicting market developments. In this case, we operate in the short term, even intraday.

Quantitative trading includes that part of the measurable technical analysis, but also the fundamental one based on accounting data or the macroeconomic environment, both expressed with numbers. Therefore, now it will operate in the short and long term.

Financial education is the essential basis when we want to enter the world of financial markets. Although it is true that your broker would be in charge of knowing these aspects, sometimes we decide to invest directly through specialized platforms.

For this reason, training and acquiring economic and financial knowledge is important. It is very useful to know what a moving average or a non-current asset is, for example. All this will help us better understand quantitative trading and many other aspects of our life.