Man or Machine?
Systematic or discretionary trading? What’s better?
As quants we’re inclined to favor a systematic approach. However, 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 a noisy Fata Morgana of the markets? Well, you can never be 100% sure, 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.
“No man is better than a machine, and no machine is better than a man with a machine.” (Paul Tudor Jones)
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