A $16B hedge fund CIO gives an easy explanation of quantitative trading

Ryan Tolkin, the CIO of a $16 billion hedge fund Schonfeld Strategic Advisors, helped us understand what quantitative trading actually is.
--------------------------------------------------
Follow BI Video on Twitter: bit.ly/1oS68Zs
Follow BI on Facebook: bit.ly/1W9Lk0n
Read more: www.businessinsider.com/
--------------------------------------------------
Business Insider is the fastest growing business news site in the US. Our mission: to tell you all you need to know about the big world around you. The BI Video team focuses on technology, strategy and science with an emphasis on unique storytelling and data that appeals to the next generation of leaders - the digital generation.

[@QUANT_Trader88]

Implementation methodology a repeatable and successful approach to implementing solutions across industries and customer environments

[@grimx5772]

Wallstreet and hedgefunds like to use big and complex terms to make investing seem hard and only they can do it correctly. If they are so good, then why are index fund beating most of the mutual and hedge fund returns? My returns percentage so far in my individual trading account is greater than most hedgefund. Also keep in mind public companies have their quarterly earning reports online for anyone to read, so take the time to read them and understand the company before investing or even shorting. Teach yourself how to invest and stop giving these salesman of wallstreet your money.

[@root.li.23]

I work at a hedge fund, and I can tell you that the reason is that the proprietary accounts’ performance metrics aren’t made public. This is because the AUM comes from employees’ savings as opposed to outside investors. These accounts usually are allocated the best strategies which often deliver >30%/year on Sharpe ratios greater than 4. Due to their proprietary source of funding they are not required to disclose performance numbers to the public press. The most famous of these prop employees accounts is Medallion by Renaissance Technologies. Its performance is pretty much known because of its legendary returns, but there are many other funds with extremely high performing employees funds that no one knows about. The second reason is what I would call “size bias”. The returns of the largest hedge funds tends to be more public than the return of small hedge funds (small as in, less than 10bn AUM). Because trading isn’t a scalable business, the larger funds will perform worse than the smaller funds that can afford higher turnover rates, making it seem like the hedge fund industry doesn’t perform well.

[@annajones9701]

@@root.li.23 Hi, agree some very valid points on fund size. What average annual returns is your fund returning? Thanks

[@RabianskiT]

⁠​⁠@@annajones9701 His returns are probably amazing… but if you subtract fees/ commission and other expenses, you’re probably better off buying index funds 😜 In my opinion, the primary benefit of using a hedge fund/ portfolio manager is appropriate risk management and personalized strategy. Not the returns. Returns are usually related to RISK - for some, safer 8% is more optimal than riskier 20%.

[@astro1253]

It’s all market inefficiencies and Liquidity captures hence the power of 3 1.accumulation 2.manipulation (manual maneuver, news price manipulation) 3.Distribution the institutional order flow Master market structure from macro level to micro level Master the times zone price moves in the most volatile and volumes times NY session AM & PM EST time no trading in market lunch hours which is 12:00 PM EST - 01:00 PM EST

[@anooprs1988]

Ict

[@ayamurayama3961]

That’s ICT not Quant. There’s no ICT traders in hedge funds. They use SCIENCE lol.

[@anooprs1988]

@@ayamurayama3961 do you know wat quant really is?? lol..

[@mintukalita7954]

VERY SIMPLE, YOU JUST NEED A SUPER COMPUTER COSTING MIGHT BE BILLION TO EXECUTE MILLION OF TRADES IN A MATTER OF SECOND.

[@jesusvillalobos3468]

Hey i just tried to buy stock in an Australian bank on Vanguard and the symbol was unrecognizable. Anybody been through this and figured out what you have to do to buy foreign securities on Vanguard?

[@sreenirajan7229]

You can only buy the ADR share of international security.

[@darunehilmes9469]

@@sreenirajan7229 wow I don't think he/she sees this comment.

[@garysimpson7326]

I stick to dollar cost averaging.

[@PrawnzHD]

What's the difference between quantitative investing and investing in those robo-funds controlled by ai? This video is definitely unclear and his explanation feels extremely unfinished.

[@HaiLeQuang]

What are some of the best books on quantitative investing strategies I can read on?

[@ty814]

The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution by Gregory Zuckerman

[@Thewinners-circle]

My guy learn statistical analysis. Learn statistics for mathematical probability analysis

[@aviralsharma2005]

​@@ty814 lmao that's not gonna get you into QuantFin. Stats, maths, and a lot of probability theory is what you need. Then you learn to program and get very good at it - or at least enough to make your own models in python.

[@epicurusone6897]

As clear as mud. So badly explained. He should be ashamed that he has failed in explaining an idea to people other than experts.

[@eduard-adrian4778]

They set a framework run investments through it on a computer and the computer tells them what and how to buy in ordet to eliminate human emotion

[@SimbolicProductions]

Sounds like it adds a lot of value to every day people of the world LOL

[@johnatanfx]

Are Prop Firm Challenges a Scam Yes or No? Which ones can we trust 10%?

[@ayamurayama3961]

Topstep but that’s if you actually get out of forex. Futures reigns overall

[@lilrexy6088]

I want to start daytrading. Any day traders out there want to tell me anything? (Tips/teach/anything)

[@joshreilman247]

RichyRichGames Don't do it.

[@johndrake299]

Don't listed to Tim Sykes

[@Joe-zw9ep]

I day trade for a living +RichyRichGames. Learn first then trade, also have no emotions whilst trading, it's more simple than people make out.

[@imjudgingyou7271]

Invest in what you know

[@athousandwords5469]

Hey man, I've got this really great penny stock, I think it's really gonna take off.

[@tonygeo]

This sounds like a robot?

[@TheBatman2022DC]

Cant understand it?, Dont worry your not supposed to!!!

[@samlansky6159]

His basically saying they’ve got ai trading bots that does the trading for them so there’s no emotions involved

[@bolcobaba]

Whats so hard in it

[@bolcobaba]

​@@samlansky6159no man , not exactly like this

[@chiomaobunadike3313]

Everyone does

[@owoFlygon]

Surprise surprise, some things you have to try to understand.

[@Anna-de8pd]

Trading is a compounding game. I'm getting 8% ROl per week from hedgefund. This is 32% in a month and I consider this very realistic and OK. But the problem is most traders are so greedy and that's why they keep blowing up because they want to turn 100 to 5k in short period. I'II just encourage more traders start going with hedge funds and you'll see the growth

[@leno2347]

Waoh Which hedge fund is that??!

[@Anna-de8pd]

0N tteelleeggrraamm

[@Anna-de8pd]

Bullhedgefund

[@Anna-de8pd]

BULLHEDGEFUND

[@napoleonpon2480]

​@@Anna-de8pdhow much capital did you get from them?

[@barbaracovey]

I still don't what it is. 🤔

[@Gonz0131]

This is only relevant if the market is rational, which it isn't.

[@upgrader99]

This was an ad for "Why you should put your money into the stock market." ps - dont.

[@statsbruh]

upgrader99 it's not

[@brandonaldred]

Where do you put your money?

[@upgrader99]

in my shoes

[@Baba_Hedge]

Schoenfeld is a jock of a Hedgefund.

[@murtr6565]

I dident understand shit

[@VidsAccount123]

Basically, one says you are confident in making a certain decision, and the other says you are a certain percentage confident in making that same decision.

[@brandonaldred]

Either way, the decision depends on people. If they knew the stock was going to go somewhere, the stock price would surely move now - not in the future. Rational decisions & emotional people, that sounds like a recipe for success.

[@aintnoslice3422]

+VidsAccount123 So why is it called 'quantitative trading'? I would of assumed it refered to 'quantity'.

[@VidsAccount123]

Say you have two people investing in stock from the same company. The person who is using a discretionary strategy would use previous experience to eyeball the amount to buy and sell, and when to do so. The person with a quantitative strategy would be using a computer (along with an understanding of statistics, mathematics, economics, and computer science) equipped with software that would give them best time to buy and sell and how much (this is where the 'quantity' comes in). Sometimes, even the computer will do it for them automatically. As a bonus, you can see that with the advancement of artificial intelligence, positions where people are picking out stock would become obsolete, since AI would give you the most optimal and consistent results. Hope this helps.

[@roysmith9149]

A computer a.i makes the trading decisions not a human

[@willywonka077]

So basically a computer is doing there trading why not just say that!!!!! I want the program that does this so i can buy it

[@RocknRobby]

Right bro tried to sound as intelligent as possible 😂😂

[@jeff-hh9mc]

He’s speaking jibberish in order to convince people he’s smart and to turn over their money.

[@ryak2]

What is that haircut? Why even bother wearing a suit if you're going to wear your hair like that?