10.6. SUMMARY
Quant trading offers many potential benefits to investors and practitioners. The discipline, computing power, and scientific rigor brought to bear on the challenge of making money in a highly competitive marketplace certainly pay dividends overall. However, quants have their own sets of problems to deal with. Some of these problems are unique to quants (e.g., model risk), but most are simply more significant for a quant strategy than for a discretionary one (e.g., common investor or contagion risk, exogenous shock risk, and regime change risk). Quants utilize various types of tools to monitor their systems and risk, which can help mitigate the downside associated with the risks of quant trading.
Having discussed at length the challenges facing a quant trader and how the quant faces these challenges, we turn our attention to various criticisms of quant trading that are widely espoused in the marketplace.
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