What are the most common systematic trading strategies ?
There are many different systematic trading strategies that traders and investors use. Some common strategies include:
- Trend following: This strategy involves identifying trends in financial markets and buying or selling assets accordingly.
- Mean reversion: This strategy involves buying assets that are undervalued and selling assets that are overvalued, based on statistical analysis of historical data.
- Momentum: This strategy involves buying assets that are performing well and selling those that are underperforming, based on the assumption that past performance is a good indicator of future performance.
- Arbitrage: This strategy involves taking advantage of price discrepancies between different markets or financial instruments.
- Quantitative: This strategy involves using mathematical models and algorithms to analyze financial data and make trading decisions.
- Risk management: This strategy involves identifying and mitigating risks in a portfolio, such as through the use of diversification or stop-loss orders.
It's important to note that systematic trading strategies can be used in combination with each other or with more traditional, discretionary trading approaches.