Inside the Black Box

In the newly revised Third Edition of Inside the Black Box: A Simple Guide to Systematic Investing, veteran algorithmic trader and investment manager Rishi K Narang delivers an easy-to-follow and insightful presentation of how quantitative and algorithmic trading strategies work in the real world. Offered in non-mathematical terms, the author discusses the most recent developments in the field since the publication of the previous edition in 2013. You'll find compelling anecdotes and real-world trading stories that help illustrate the hands-on ideas explained within. You'll also discover explanations of the evolution of quantitative trading and the emergence of "Quant 3.0," explore the explosion in machine learning for alphas, signal mixing, data extraction, and execution, and examine the proliferation of alt data and learn how to use it appropriately. Inside the Black Box demonstrates the relationship between discretionary investing and the overall quantitative and high-frequency trading market, along with newer, simpler, and more effective approaches to portfolio optimization. It reviews the emergence and growth of platforms and pods as a dominant force in the sector and as a new pathway for talent entering the space. The author answers foundational and important questions about quantitative and high-frequency trading, including: How do quants capture alpha? What is the real level of discretion in quant trading? What is the difference between theory-driven systems and data mining strategies? And how do quant traders model risk? Perfect for aspiring and practicing quantitative traders everywhere, Inside the Black Box is a jargon-free and accessible treatment of a complex and timely subject. It's sure to remain the gold standard for non-mathematicians seeking to understand the ins and outs of a lucrative trading strategy.