Man or Machine?
Systematic or discretionary trading? What’s better?
As quants we’re inclined to favor a systematic approach. At the same time we realize that systematic and discretionary trading processes are essentially the same, except for that the former encapsulates the decision-making dynamics in a rules-based framework while the latter doesn’t.
Coded trading systems enable us to methodically repeat a tried and trusted method. That’s a great thing. We let the machine place our bets in the markets and remove ourselves from the day-to-day trading process. If our betting system has edge, we should be rewarded with gains.
Humans on the other hand can be highly inventive and see things which a machine cannot – or at least not easily. But how can you make sure that what you see is real and not just a noisy Fata Morgana of the markets? Well, there’s never a guarantee, but when you’re able to blend statistical observations with long-term trading experience, you can increase the odds of discovering something valuable.
Twoquants® is both. Model-driven, but human. That’s our recipe for playing the hardest game in the world.
“No man is better than a machine, and no machine is better than a man with a machine.” (Paul Tudor Jones)
LATEST BLOG POST
Extreme Edge
It’s been great to be on the Chat with Traders podcast on 7 September 2022 for episode #243. This write-up is meant to complement the episode and provide additional background on the warrant arbitrage trades I executed between 2015 and 2019. Before we start, episode #243 was Aaron’s last recording, and I’d like to take a moment to thank him for all the great content he’s produced during the past years. [...]
MEDIA
The Interplay Between Crypto and Global Macro
I had the pleasure of moderating the the Crypto & Global Macro panel at Token2049 in London on 9 November 2022. With me on the panel were Dan Tapiero from 10T Holdings, Jordi Alexander from Selini Capital, and Jean-Marie Mognetti, the Founder & CEO of CoinShares. Recorded on November 9, 2022.
TRADE IDEAS & TOOLS
Position Sizing: A Systematic Tool to Add to Your Trading Toolkit
When most people think about systematic trading, they likely picture a price chart with a plethora of moving averages, oscillators, and trend lines all with the goal of nailing the perfect entry right before a market takes off for the moon. While a good deal of time in systematic strategy development is devoted to entry and exit methodology, the greatest [...]
Methods to the Madness – The 2Q Newsletter
Our MTTM newsletter covers a diverse range of topics. When we write about trading, we aim to synthesize quant-driven investment ideas into actionable trades. We zero in on price trends, momentum, spreads, correlation, and volatility. We look at futures, equities, ETPs, options, and digital assets – and anything else that crosses our quantitative trading minds. This, we hope, makes the MTTM newsletter original and unique.
Our Core Values
We want to be guided by what matters: data, numbers, facts
We search for anomalies in the data and, where possible, seek to enter into trades to exploit them
We always want to improve our trading, do something better, find something new
We are agnostic to what the markets seem to be or what people say they are. Biases can kill you when trading in the markets
We read a lot, and across many subjects. This may not be a competitive advantage, but not doing it simply isn’t an option
We study market history and investors’ traumas to become better traders