Using advanced mathematical models instead of artificial subjective judgment, and using computer technology to select all kinds of "high probability" events that can bring excess returns to make strategies, greatly reducing the impact of investor's emotional fluctuations and avoiding making irrational investment decisions in the case of extreme fanaticism or pessimism in the market. Quantitative trading refers to the use of mathematical models to replace people's subjective judgments, and the use of computer technology to select high probability events that can bring excess returns to enterprises, so as to formulate strategies conducive to the development of enterprises.

Since18th century, pioneers of financial investment have begun to explore various investment methods. After years of evolution, they tried different directions from value analysis, risk arbitrage to intraday trading. Then, in the ever-changing capital market of China, what investment directions urgently need us to explore? The author thinks that quantitative investment, as a new investment method, has attracted more and more attention in China market.

Although China investors are no strangers to quantitative investment, they are still ignorant. With the help of modern statistics and mathematics, quantitative investment theory uses computer technology to select all kinds of "high probability" events that can bring excess returns from huge historical data to formulate strategies, verify and solidify these laws and strategies with quantitative models, and then strictly implement the solidified strategies to guide investment in order to obtain sustained, stable and above-average excess returns. Quantitative trading mainly uses mathematical formulas to establish a model, judges the future price trend through a large number of data, and selects stocks by the program. Its stock selection is very extensive, covering hundreds or even thousands of stocks, which can rule out human factors such as forced rise and falling, and is very disciplined.

"Quantitative trading" has two meanings: first, in a narrow sense, it refers to quantifying the trading content, transforming the trading conditions into procedures and automatically placing orders; Second, in a broad sense, it refers to a systematic trading method and an integrated trading system. That is, according to a series of trading conditions, the intelligent decision-making system combines rich experience with trading conditions to manage the risk control in the trading process.

Quantitative trading should include at least five elements:

(1) trading signal system.

(2) The direction of bull market or bear market, such as using the 200-day moving average to distinguish the avoidance of systemic risks in bear market.

(3) Position management and fund management.

(4) Risk control: using signal sources to determine the stop loss position, and using asset curve and equity curve to make judgment and management.

(5) Portfolio, different investment varieties, different trading systems (different functions and parameters, different speed) and different time period combinations are now dispersed and combined, which makes trading account fluctuations more stable.