Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading (Wiley Finance)
New edition of book that demystifies quant and algo trading
In this updated edition of his bestselling book, Rishi K Narang offers in a straightforward, nontechnical style—supplemented by real-world examples and informative anecdotes—a reliable resource takes you on a detailed tour through the black box. He skillfully sheds light upon the work that quants do, lifting the veil of mystery around quantitative trading and allowing anyone interested in doing so to understand quants and their strategies. This new edition includes information on High Frequency Trading.
- Offers an update on the bestselling book for explaining in non-mathematical terms what quant and algo trading are and how they work
- Provides key information for investors to evaluate the best hedge fund investments
- Explains how quant strategies fit into a portfolio, why they are valuable, and how to evaluate a quant manager
This new edition of Inside the Black Box explains quant investing without the jargon and goes a long way toward educating investment professionals.
"Rishi Narang breaks down the complexities of quantitative investing into straightforward concepts that are accessible to a wide audience of investors, not just 'math types.' But Inside the Black Box does more than that—it provides a valuable framework for assessing any investment strategy. It's well worth reading regardless of experience level or numerical acumen."
—CRAIG DANDURAND, Portfolio Manager–Absolute Return Strategies, California Public Employees' Retirement System (CalPERS)
"Rishi provides a comprehensive overview of quantitative investing that should prove useful both to those allocating money to quant strategies and those interested in becoming quants themselves. Rishi's experience as a well-respected quant Fund of Funds manager and his solid relationships with many practitioners provide ample useful material for his work."
—PETER MULLER, founder, PDT Partners
"Quantitative trading, like all investment strategies, gets more complex yet more interesting the deeper you dig into it. Rishi deftly peels back the layers, walking readers through each building block and their combination, then providing useful chapters on evaluating model-based approaches and finally a new section surveying high-frequency trading. Anyone approaching the space will learn something from this clear, thorough, and readable book."
—ALEKSANDER WEILER, CFA, Senior Portfolio Manager, Public Market Investments, Canada Pension Plan Investment Board
"Rishi continues to demystify even more quantitative trading areas in this excellent new edition. Significant updates include several new chapters that shine much-needed light on high-speed and high frequency trading. This book continues to be a must-read for anyone interested in quantitative trading."
—STEVE EVANS, Managing Director of Quantitative Trading, Tudor Investment Corporation
Table of Contents
PART ONE: The Quant Universe
CHAPTER 1: Why Does Quant Trading Matter?
CHAPTER 2: An Introduction to Quantitative Trading
PART TWO: Inside the Black Box
CHAPTER 3: Alpha Models: How Quants Make Money
CHAPTER 4: Risk Models
CHAPTER 5: Transaction Cost Models
CHAPTER 6: Portfolio Construction Models
CHAPTER 7: Execution
CHAPTER 8: Data
CHAPTER 9: Research
PART THREE: A Practical Guide for Investors in Quantitative Strategies
CHAPTER 10: Risks Inherent to Quant Strategies
CHAPTER 11: Criticisms of Quant Trading
CHAPTER 12: Evaluating Quants and Quant Strategies
PART FOUR: High-Speed and High-Frequency Trading
CHAPTER 13: An Introduction to High-Speed and High-Frequency Trading*
CHAPTER 14: High-Speed Trading
CHAPTER 15: High-Frequency Trading
CHAPTER 16: Controversy Regarding High-Frequency Trading
CHAPTER 17: Looking to the Future of Quant Trading