Is a quant trader who does quantitative analysis but then trades discretionarily based on his analysis still considered a “quant”?
Answer by Laurent Bernut:
if Quant means systematic then the answer is easy. Being a systematic trader is like being pregnant: either You are, either You are not. You cannot be half pregnant.
95% systematic with a 5% discretionary overlay is still 100% discretionary for a simple reason: the power of No. It is not the trades we say Yes to, but the one we say No to that turn you into a discretionary trader.
The best example is stop loss. Honoring stop loss is what separates the men from the boys in the trading world.
Now, if You have 5% overlay, You may think this is oversold and it will bounce back. The worst thing that can/will happen is for You to be right.
It will give You license to do it again. By the third time, You will have created a new neural pathway that will rationalise not taking stop losses.
At that point, You are no longer trading a system. You are 100% discretionary.There is no judgement as to which is better or worse: systematic or discretionary. It is only bad if You are discretionary passing as systematic
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