What is the focus of quantitative trading?

Quantitative trading focuses on employing mathematical models and algorithms to make trading decisions. This approach utilizes complex statistical techniques and computational methods to analyze large sets of data, seeking to identify patterns or trends that can inform trading strategies. By relying on these models, quantitative traders aim to reduce human bias and emotion in trading, making their decisions based on data-driven insights rather than intuition.

In quantitative trading, the automation of trades through algorithms allows for high-frequency trading and the ability to react to market changes more rapidly than traditional methods. This systematic approach often incorporates various factors, including market sentiment, price movements, and other quantitative metrics, to develop strategies that are continuously refined as more data becomes available.

While historical data may play a part in quantitative trading (as indicated in one of the other choices), the defining characteristic is the reliance on mathematical models to drive decisions. This differentiates quantitative trading from approaches that might prioritize intuition, predictive analysis solely based on past performance, or a focus purely on company fundamentals, which are more characteristic of fundamental analysis.