Are you interested in Quant Trading, as well as some of the reasons why AuBit is committed to using it?
In this article, we walk you through Quant Trading as well as the relevance of AuBit and the use cases of the $FWT token.
What is Quant Trading?
Quant Trading is short for quantitative trading. It is a data-intensive approach to trading and is used in financial markets as a means of developing predictive models to help inform decisions about future price action. Quantitative Trading relies on mathematical and statistical models that evolve over time as programs gather input about ongoing prices and how they respond to real-world events.
Quant trading derives from findings in Quantitative Research. A number of advanced trading companies now use a set of parameters for automated trading that is monitored closely. However, after the models are developed and implemented, these systems put humans in the backset, taking real-time decisions out of their hands.
The history of quant trading can be traced to sometime back in 1970. Since then, it has been over 5 decades. In today’s markets, this technology tends to be considerably more profitable than human traders. Automated trading systems have several significant advantages over human traders. They can analyze considerable amounts of data in seconds. Additionally, they are not susceptible to the same level of emotionality that can cause human traders to make panicked or tilted decisions that often lead to very bad outcomes.
So, if you have been meaning to understand how it works and what a Quant Trader does, we’ll dive into some of the details here.
Quant Trading vs. Algorithmic Trading
There has always been a bit of confusion on the difference between quant trading and algorithmic trading. Although they may seem similar, there are some key differences.
The key similarity is that both use data to interpret patterns that can be used to make more accurate price predictions. Other than that, the two function differently.
For example, quantitative trading uses advanced mathematical methods to come up with data-driven parameters for executing trades. Also, it requires constant monitoring, which means that the trader needs to manually optimize the system.
This is not the case with algorithmic trading, which is completely automated most of the time. Here, the trading patterns and percentages are detected before the system executes the trades on your behalf. Worthy of mention is that the trading ideas are turned into trading strategies via coded algorithms. The algorithms will continually execute trades any time the rules of those parameters are met.
Another difference between the two is that quant trading combines several datasets to come up with the patterns or parameters for executing trades. On the other hand, algorithmic trading can sometimes focus on obtaining parameters by just sourcing trade data and using charts from exchanges.
Quant Trading: How does it Work?
How does quant trading work? This type of trading strategy is mostly data-driven and requires lots of datasets for modeling and looking for trading opportunities using those parameters.
The reliability of the parameters can be accentuated by the conversion of the trends of a financial asset over a given period of time. Once these patterns are detected and found to be recurring, they are converted into numbers for onward remodeling as time goes on.
This has some similarities to machine learning, where a program can assess its own performance in the market, compare this with price action during the time the program was active, and re-adjust its parameters so that it will have a higher theoretical chance of predicting prices more accurately in the future.
Seasonality is one simple example of a relevant data point. The time of year may have an impact on stock prices, as one of many potential factors that may be integrated into a predictive model. This causality may furthermore be true of only particular types of stocks. Historical stock price data is abundantly available to be analyzed by programs that look for patterns in causality like this so they can take advantage of predictable trends in the future.
How has Quant Trading Changed Since Crypto?
Quant trading strategies were in use for over 30 years before cryptocurrency came along. In the professional trading world, applicants usually needed to have a PHD from a top-tier university to be seriously considered for a lucrative position on Wall Street. Programming skills became considerably more important. Included in the key programming languages used for trading were Perl, MATLAB, C++, Python and Java.
Having a knack for mathematics is also one of the strongest factors to consider if you want to become a quant trader. The development trading strategy requires lots of computation and data research. Paying attention to details is also very important, as a small error could potentially impact a program’s ability to run profitably. However, programs can also be backtested or run on ‘paper trading’ platforms that essentially simulate their performance in real-time markets without making any real-world trades. Often, only when they’re proven to work consistently and in a variety of different types of market conditions are they deployed to take action with real buying power.
The evolution of quant trading has been a slow, but steady transition in trading methodology. For example, the theories surrounding quant finance (especially the one propagated by Louis Bachelier, called Theory of Speculation), were not fully in use at the time because they were not practicable.
It wasn’t until sometime in the 1950s when things began to take shape, all thanks to the development of computational finance methods by Harry Markowitz. This development signaled the inclusion of many financial assets and securities to use quant trading.
Further developments were made in the traditional financial markets, notable among which is the transition to electronic trading. The use of dark pools and later the introduction of machine learning for improved trading decisions made the capital market more innovative.
The year 2000 became an era for massive quant trading, as many hedge fund managers ported to this system to maximize the returns they made from the capital markets. The introduction of Bitcoin and other cryptocurrencies ushered in a new era for quant trading.
Cryptocurrency trading has specific strategies, of which quant trading is not so popular. Most cryptocurrency asset classes are traded by using fundamentals (News and important upgrades to the cryptocurrency project), as well as technical analysis (chart patterns and market trends).
Notwithstanding, some cryptocurrency hedge fund managers are continually hiring experts in quant trading so they can diversify their investment strategies.
Quant trading also has a chance to feature in the cryptocurrency market. Experts opine that the under-listed models can be used to fuse quant trading into some of the existing cryptocurrency trading and investment strategies:
1. Risk Management Models
Risk hedging is one of the most important factors to consider when trading or investing in the financial markets. The cryptocurrency market is relatively new. One of the metrics for judging the risks therein is the volatility of these assets.
Quant finance/trading can have a role to play here in the sense that similar trends are noticeable in trading financial markets. Thus, the continuous evolution of the risk tendencies of the cryptocurrency market can create more opportunities for quant finance to evaluate those risks.
2. Cryptocurrencies Present a New Source of Alpha
Alpha is a model used to underscore the returns of an investment in comparison to those of its corresponding benchmark index.
This strategy is popular when using quant trading strategies to evaluate the returns.
Cryptocurrencies are meant to be decentralized financial asset classes that are not dependent on any third-party. Instead, the blockchain network, one of the subsets of the Distributed Ledger Technology (DLT) platforms, is used to record the details of these transactions.
The transparency of the blockchain makes it easier for quant strategists to follow the flow of capital through the crypto markets. Considering that cryptocurrencies are all about transparency, these datasets allow traders to track transactions made by whales and retail investors. Ostensibly, this is the ‘smart money.’ The transparency of these markets makes it easy to trade in accordance with big players, perhaps with better returns.
What are the Top Tools for Quant Trading?
The success of quant trading is made possible because of the application of several strategies and the use of multiple tools.
In this section, we talked about the different aspects of quant trading, as it pertains to the methodologies used.
Quant Trading System Components
You can use 3 major components to identify the best mathematical probabilities to use, as well as execute those probabilities for maximum profits from your investments.
These are the 3 most-used components:
1. Identify the Best Strategies
Not all strategies would work. Find the best strategies by finding several strategies, testing them alongside the strategies you already have and choosing the best out of the rest. The strategy identification component or model also involves taking note of the investment amount (capital) and confirming the risk options.
2. Backtest the Strategy
The next step is to test or implement the quant trading strategy you selected to a historical data. Keep an eye on it to see how it plays out because that gives you an idea of how the strategy would react in a live trading situation.
3. Execute the Strategy
Make final tweaks to the strategy before deploying it by using any of the options – manual or fully automated.
You also want to consider some important factors that would help you make the appropriate execution/deployment for the strategy. These factors include:
- The interface of the broker
- The type of execution, such as manually entering the details of the strategy, one-click trading execution (Semi-Manual) and Automated, meaning that no human intervention is required.
- Divergence of the performance.
- Cutting down on the transactions costs and minimizing risks by reducing the spread, commission, spread and tax.
What are the Payouts for AuBit and $FWT?
AuBit is an asset management company that focuses on offering different kinds of asset management services for several cryptocurrency asset classes.
The company uses the Freeway Token abbreviated as $FWT as its utility token. This is the token the investors can use to choose or pick the type of cryptocurrencies they would like AuBit to place as Assets Under Management (AUM).
AuBit makes payouts or returns on these investments by making daily payouts in stable cryptocurrencies to the balance of the investors. This is the case if the investors made the deposits or investments using fiat currencies. The payouts are processed via Freeway Lite.
Deposits or investments made in the form of cryptocurrencies would be paid out in the same cryptocurrency, every day. The payouts would be processed via AuBit Prime and added to the cryptocurrency balances of the investors.
How is $FWT Using Quant Trading to Power their Platform?
We would like to mention that AuBit uses quant trading strategies as one of the parameters for making excellent trading and investment decisions on behalf of its investors.
As a fully regulated platform offering cryptocurrency hedge fund services, AuBit makes sure that the investors are covered from all angles. Also, it offers brokerage services that involve protecting the funds of its investors. AuBit doesn’t lend these funds; neither does it trade the funds.
However, AuBit promises better returns on the assets or funds of its investors. This is guaranteed under the Freeway Deposit Rewards where the AuBit Prime Brokerage maximizes revenues by utilizing quant trading. The company only expects more assets to be placed under its management, as that can help it in maximizing the quant trading strategies.
AuBit also offers two kinds of staking models, with each offering up to 43% APY rewards. The Institutional Supercharger Staking is ideal for companies and institutions that would want to take advantage of the greater rewards offered by AuBit. For this category of investors, AuBit offers up to 43% targeted rewards for ETH, BTC, USD and EUR. These rewards are powered by the sub-licensed quant trading technology used by AuBit Prime brokerage.
The Retail Supercharger Staking also offers up to 43% APY on staked or invested cryptocurrency assets. The difference between this and the other is that it is meant for the retailers – individuals who are enthusiastic about cryptocurrencies. This set of investors can be allowed to use this passive income service, only if they come from any of the 180 shortlisted countries.
What is the Current Market Cap and Token Price of $FWT?
The Freeway Token ($FWT), the utility token of the AuBit ecosystem, has a total supply of 10 billion units. At the time of writing, the price of the token was $0.01886. This is subject to change, depending on the trend in the market and the increasing utility/usefulness of the token.
The market capitalization of any cryptocurrency asset, including tokens like $FWT, is calculated by multiplying the circulating supply (number of issued tokens) by the current price. At the time of writing, the circulating supply of the $FWT token is 5.35 billion units. Multiplying this by the market price mentioned earlier pegs the market capitalization of the $FWT token at $100,829,458.
How Much have Similar Tokens to $FWT Grown?
Do you want to know how many projects like this are involved? When we checked, the $FWT token was tagged or pegged to other tokens categorized under the Trustswap Launchpad and Binance Smart Chain ecosystems.
At the time of writing, the Trustswap Launchpad ecosystem had a 24-hour trading volume of $33,087,864 which amounted to a 0.6% increase. On the other hand, the cumulative market cap was pegged at $389,812,663. This signified a 3.13% decrease.
The Binance Smart Chain (BSC) was appreciating all through. Over $164,086,598,231 was pumped into the BSC market in the last 24 hours from the time of writing. This signifies a 2.48% increase. The market capitalization also grew by 0.54% to sit at $1,164,079,898,481 at the time of writing.
How can I Buy $FWT?
Do you want to buy the Freeway Token ($FWT) so you can gain access to the plethora of services offered by AuBit?
There are several ways to buy the token, including using the Spot, Futures and Perpetual markets. At the time of writing, only the Spot market was active.
That being said, another important factor to consider is the platform where you can buy the token. $FWT is not listed on most of the popular cryptocurrency exchanges, such as Binance. The platforms where you can buy the token include:
- Uniswap (V2): An Automated Market Maker (AMM)
- PancakeSwap (V2): Also an AMM
- AscendEX (Bitmax)
The other important factor to consider is the liquidity on the trading platform. The higher the liquidity is the higher the chances that sufficient funds are available for the trades. The volume also shows the number of funds pushed into the market for trading the token. This is measured in percentages.
Do not forget to check the last time the update was made, because that indicates that trading activities are ongoing. You can use CoinMarketCap for this analysis.
Now, you are ready to buy the Freeway Token ($FWT). There are 2 major ways to do that – (a) by using a cryptocurrency exchange, such as Bitglobal or AscendEX (Bitmax) or (b) using an Automated Market Maker (AMM)/Decentralized Exchange (DEX).
1. Use a Cryptocurrency Exchange
You can use a cryptocurrency exchange, such as Bitglobal or AscendEX. These are the steps to guide you:
- Create an account on the exchange, using your email address and telephone number.
- Confirm your email address and or telephone number by entering the Code sent to you or clicking on the link in the email sent from the exchange.
- Verify your account by uploading the required documents, such as government-issued ID or international passport.
- Deposit money to your account by using any of the payment methods supported by the exchange.
- Buy USDT with the money you deposited. This is because the $FWT token is mostly traded against the USDT pair on those exchanges.
- Search for $FWT using the search bar on the exchange.
- Choose the USDT trading pair and wait for the trading interface to open.
- Enter the amount you want to spend and confirm the transaction.
- Your $FWT token will be credited to the corresponding wallet on the exchange.
2. Buy the $FWT Token from an AMM
You can also use an Automated Market Maker (AMM) or Decentralized Exchange to buy the $FWT Token. Follow the steps below to do that:
- Create a wallet on a digital wallet platform, such as Trust Wallet.
- Copy and store your private keys.
- Enter the keys/passphrases to confirm the wallet when prompted.
- Buy BNB from Binance or ask someone to buy it for you. The BNB should be sent to your BNB wallet address on Trust Wallet.
- Navigate to the DEX section to swap your BNB for WBNB.
- Navigate to the DApps section and choose PancakeSwap.
- Follow the on-screen prompts to connect your wallet to PancakeSwap.
- Go to the CoinMarketCap website and search for Freeway Token ($FWT). Copy the contract address.
- Go back to the PancakeSwap interface and paste the contract address in the section where you are asked to choose the token to swap.
- Enter the amount of WBNB you want to swap for $FWT.
- Follow the on-screen instructions to confirm the transaction.
- Wait a few minutes for the transaction to be processed over the blockchain. You should get a notification letting you know that the swap was successful.
- Go back to your Trust Wallet interface and check to see if the token is showing. If it is not, go to the CoinMarketCap website to copy the contract address and the decimal.
- On your Trust Wallet, navigate to the section for adding new tokens. It should be at the top of the screen.
- Click on the Add Custom Token
- Paste the contract address and decimal of the $FWT token, then click on the Done
- Go back to the interface and check again. The name of the token, the units you hold and the value in USD should now be showing.
Quant trading is an amazing concept and is still relevant even in the cryptocurrency market. Cryptocurrency hedge fund managers like AuBit are already playing a huge role towards making quant finance one of the important strategies for making trading and investing decisions for cryptocurrencies.