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
Citywire Crypto Event in Munich
It's been my pleasure to give the keynote speech at Citywire's first dedicated crypto event in Munich on 30 March 2022 at The Charles Hotel. This has been a great opportunity to catch up with investors and wealth managers and learn about their approach to investing in the digital assets space. One thing is for sure: Investors are getting on board. Fast.
MEDIA
How to survive a crypto bear
Surviving a crypto bear market is no easy task. But Joey Krug has made it to the other side of all of them. Joey, the co-chief investment officer of Pantera Capital, joins special guest host Moritz Seibert, the CIO of Exponential Age Asset Management, to share his thoughts on the recent market turmoil and the opportunities it’s created in [...]
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 [...]
The 2Q Newsletter
Our 2Q 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 2Q 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