When picturing how investors decide on what stocks to purchase, many people imagine them scouring over news and data to choose the companies that are the best bets for their portfolio. While this is what is done when it comes to fundamental analysis, Gareth Henry sees quantitative analysis becoming even more popular when it comes to choosing what to trade. Through quantitative analysis, people use computer programs in which data and mathematical equations are implemented in order to figure out what turns the stock market will be making soon.

When the practice first began, the people doing it were a relatively fringe group. Many people questioned just how legal the process was as it had the ability to drastically change the prices on the stock market, but in the end, it was completely within the rule of the Securities and Exchange Commission. These methods were being used before the Y2K crisis happened and they were able to make a lot of money for investors who had a lot of capital to put into the practice. Gareth Henry predicts that there will be a big rise in popularity with this type of investing as the programs used are becoming very accessible. See more of Gareth Henry on facebook

When quantitative trading, another name for program trading, first gained popularity, there weren’t that many people who had access to the technology needed to do it. Computers were expensive and it was a lot of data to process that most home computers just couldn’t handle. Now, there are kits available that contain information and programs to get people started on quantitative analysis and trading. Gareth Henry sees this being a big thing even for investors who don’t have millions to put into the market.

This practice does come with a relatively high degree of risk, but it can also come with very high return rates if it is done properly. Gareth Henry notes that the world of program trading is morphing into what is called quantitative investing as it is becoming more and more mainstream. Quantitative analysis uses data to predict behavior and it can be very accurate as long as the right variables are considered.

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