Top 10 Best Quantitative Trading Books for Beginners

01 What is Quantitative Trading

Best Quantitative Trading Books for Beginners
Best Quantitative Trading Books for Beginners

Quantitative Trading (Algorithmic trading) is usually a complex field that beginners think is difficult to master. It covers a wide range of disciplines, and some aspects require a considerable degree of mathematics and statistics.

Therefore, we have chosen the top 10 Best Quantitative Trading Books for Beginners. After roughly mastering the basic principles of quantitative trading, the latter details can be learned slowly in an iterative, continuous manner.

The advantage of algorithmic trading is that because many brokers provide highly realistic simulation trading systems, we do not need to use real money to practice strategies.

Although there are some precautions in such systems, they provide an environment with absolutely no capital risk to help us deepen our understanding.

02 Is Quantitative Trading Sure To Make Money?

Quantitative trading can make money, but it is not sure to make money, and it is also possible to lose money.

There are many factors affecting the profitability of quantitative trading, mainly three: the adaptability of the strategic model, the ability of traders, and risk control.

1. The adaptability of the strategy model

The strategy is aimed at a certain type of market, with limited adaptability. Whether it can make money or not has a great relationship with the market.

2. The ability level of traders

Excellent traders will not rely on quantitative strategies. Quantitative trading is only a tool, they will carefully analyze and understand quantitative trading.

They will find out the market for which the strategy is suitable, analyze how many reversals of uncontrollable factors are, analyze the market situation, when to dare, add profit and loss stops, and when to manually close positions in advance.

3. Risk control

Every quantitative transaction will have a rollback, which requires traders to consider the impact of emergencies on strategies, reasonably allocate funds and positions, and set a red line to stop trading.

03 Best Quantitative Trading Books for Beginners

Anyway, Quantitative trading is one of the best ways to help us reduce risk, everyone who wants to make money on the market should be learned. Now we choose some best Quantitative Trading Books for Beginners.

1. Algorithmic Trading: Winning Strategies and Their Rationale

Best Quantitative Trading Books for Beginners
Algorithmic Trading

Algorithmic Trading is a fascinating, informative book covering many trading strategies. Both individual investors and institutional investors can learn from and use these strategies.

The strategies in this book can be divided into the mean value regression system and the momentum system. The book not only introduces how to use each type of trading strategy but also explains the reasons why various strategies are effective.

This book always focuses on simple and linear trading strategies, because complex trading strategies are vulnerable to overfitting and data snooping.

Mathematics and software are the two legs of algorithm trading. This book uses a certain degree of mathematical knowledge to make its discussion of various financial concepts clearer and more accurate.

In addition, the book also adds many illustrative examples of programming using MATLAB code, you can download from the book’s website.

2. Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading 

Best Quantitative Trading Books for Beginners
Inside the Black Box

Whether it is quantification, algorithm, or black box trading, we are talking about one thing: systematic trading executed by computers.

Although someone blame them for being dangerously out of human control and driving excessive market volatility, others believe that quantitative trading can overcome human greed and human cognitive bias in making investment decisions.

In general, no matter how much you know about quantitative trading, quantitative funds continue to outperform the market, which is why many smart investors chase black boxes.

Unfortunately, many parts of quantitative trading are still ambiguous, mainly because of the extreme confidentiality how the system works. However, in this version, as a quantitative trader and master interpreter, the author skillfully tells the reader that quantitative trading is easier to understand and control than you think.

This book is to enable readers and even investors who are afraid of mathematics or technology to understand quantitative trading. This book will lead you through the black box journey. The author points out the work done by the quants with concise language and unveils the mystery of quantitative trading and quantitative trading strategy.

After a brief introduction of quantitative trading rules and general rules, the author turned to the topic and began to introduce the detailed internals of a typical black box system, explaining in non-technical language what the internals are and how they are combined.

3. Algorithmic Trading and DMA: An introduction to direct access trading strategies

Best Quantitative Trading Books for Beginners
Algorithmic Trading and DMA

Algorithmic Trading and DMA are important tools to help buyers and sellers achieve optimal execution.

This book explains these two technologies in detail from the beginning:

The book introduces different types of execution and then reviews the market microstructure theory. Throughout the book, examples of empirical research bridge the gap between trading theory and practice.

Orders are an essential part of any strategy. Market, limit, stop, hidden, iceberg, peg, routed and immediate-or-cancel orders are all described with illustrated examples.

Use charts to explain and compare trading algorithms to show potential trading patterns. TWAP, VWAP, Percent of Volume, Minimal Impact, Implementation Shortfall, Adaptive Shortfall, Market On Close, and Pairs trading algorithms are all included, as well as common changes.

Transaction costs can have a significant impact on investment returns. An in-depth example shows how to decompose these factors into market impact, time risk, price difference and opportunity cost, and other expenses.

Coverage covers all major asset classes, from equities to fixed income, foreign exchange, and derivatives. The appendix provides a detailed overview of the world’s major markets.

For those interested in implementing these strategies, the book introduces order scheduling and execution in more detail, as well as potential enhancements (such as short-term forecasting).

It also considers cutting-edge applications such as portfolio and multi-asset trading, as well as processing news and data mining/artificial intelligence.

4. Quantitative Trading: How to Build Your Own Algorithmic Trading Business 

Best Quantitative Trading Books for Beginners
Quantitative Trading

Quantitative Trading, also known as algorithmic trading, accounts for a large transactions in global financial markets.

Although the methods used for quantitative trading seem to be quite advanced and are mostly used by institutional traders, with the continuous maturity of technology and diversification of trading strategies, individual traders can also build their quantitative trading system by learning some basic knowledge, tools, and models.

The core of quantitative trading is trading strategy, so Quantitative Trading: How to Build Your Own Algorithmic Trading Business starts with how to screen reliable trading strategies, introduces the historical backtesting methods and precautions of trading strategies in detail, and provides code cases.

After that, it also introduces how to build hardware facilities to achieve the quantitative trading strategy screened out.

On this basis, the book explains the capital management methods and risk control strategies in quantitative trading. It also introduced advanced content that professional quantitative traders must know, such as factor models and cointegration.

This book is suitable for individual investors interested in quantitative trading, quantitative trading practitioners of financial institutions, and college students who want to engage in quantitative trading.

5. The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It

Best Quantitative Trading Books for Beginners
The Quants

The Quants is a book about the alternative life of top financial masters on Wall Street.

Since the financial crisis broke out in 2007, the author interviewed many California mortgage default owners, hedge fund managers, and top economists and financial scholars, and reported the crisis in the Wall Street Journal from all directions and angles.

This book gives an unprecedented in-depth description of the emerging dominator of Wall Street, The Quants. Among them, there are not only the outstanding new players of The Quants: Muller, Griffin, Asness, and Weinstein, but also the reclusive Jim Simmons, Alan Brown, the founder of the most successful hedge fund in history, and the different types of The Quants.

These mathematical talents are like children who break into the candy store on Wall Street – they have climbed to the top from the bottom of Wall Street, causing market collapse again and again.

6. Trading and Exchanges: Market Microstructure for Practitioners

Best Quantitative Trading Books for Beginners
Trading and Exchanges

Trading and Exchanges is an extension of the lecture notes of the course “Trading and Exchange” offered by Professor Larry Harris at the University of Southern California in the United States.

It explains the basic principles of market microstructure theory in simple language. This book gives a detailed introduction to each element of the market microstructure – traders of transactions, securities, and derivative contracts, as well as exchanges and trading rules.

Through this book, readers will understand how the market operates, how the government and the exchange supervise, how prices reflect basic value information, whom provides liquidity for the market, and why some traders often make profits while others often lose.

Readers will see how different trading rules affect price efficiency, liquidity, and trading profits, and learn about the driving force of regulation.

This book is a must-read book in the securities industry, and it is excellent reading material for newcomers.

7. Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders

Best Quantitative Trading Books for Beginners
Way of the Turtle

In the financial world, there is such a famous story. In 1983, Richard Dennis and William Eckhardt, two close friends in the American futures industry, disagreed on a question: Are great futures traders inborn or can be trained?

They gambled on this question and experimented to find the answer. This is the famous “Turtle Trading Experiment”.

Dennis and Eckhardt selected 13 turtles from 1000 applicants and taught them trading ideas and rules in 2 weeks. In the following 4 years, the Turtles made an average annual income of 80% by these trading rules.

The author of this book is one of the most successful turtles in this experiment. In his book, he first revealed the whole experiment process and the mysterious Way of the Turtle in the eyes of outsiders.

04 Best Quantitative Trading Programming Books

Introduction to Python: learn Python’s most basic concepts, syntax, control structure, etc

8 Python Crash Course, 2nd Edition: A Hands-On, Project-Based Introduction to Programming 

Best Quantitative Trading Books for Beginners
Python Crash Cours

Python Crash Course is an introduction to Python for all levels. The book is divided into two parts: the first part introduces the basic concepts that must be understood in Python programming, including powerful Python libraries and tools, lists, dictionaries, if statements, classes, files and exceptions, code testing, etc.

The second part puts the theory into practice, explains how to develop three projects, including simple 2D games, using data to generate interactive information maps, and creating and customizing simple Web applications, and helps readers solve common programming problems and puzzles.

The 2nd version has been comprehensively revised, simplifying the Python installation process, adding f strings, get () methods, etc., and using the Plotly library and the new version of Django and Bootstrap in the project.

Whether Python is worth learning is no longer a question of doubt. However, how to learn Python efficiently is always an important question worth thinking about. The answer can be find in the book.

Advanced Python and data analysis: learn to use Python to process common financial data, such as stock trading data, Excel data, etc.

9 Python for Data Analysis: Data Wrangling with Pandas, NumPy, and IPython 

Best Quantitative Trading Books for Beginners
Python for Data Analysis

Still struggling to find a complete course of controlling, processing, sorting, and analyzing structured data with Python? Python for Data Analysis contains a lot of practical cases. You will learn how to use various Python libraries (including NumPy, pandas, matplotlib, and IPython) to solve differ data analysis problems.

Written by Wes McKinney, founder of the Pandas project, the book introduces the specific details and basic points of using Python to operate, process, clean and regularize data.

The 2nd version is a comprehensive revision and update of Python 3.6, covering the new version of pandas, NumPy, IPython, and Jupyter, and adding a number of actual cases, which can help you solve a series of data analysis problems efficiently.

Major updates in the 2nd version

  • All codes, including the Python tutorials updated to Python 3.6 (Python 2.7 was used in the first version)
  • Updated the installation guidelines for Python third-party release Anaconda and other required Python packages
  • Update the Pandas library to the new version in 2017
  • A new chapter about more advanced pandas tools and some tips
  • A concise introduction to the use of new stats models and scikit ear

Financial data analysis, transaction strategy writing and automatic transaction: learn how to further analyze financial data, import real-time transaction data, write and back test transaction strategies, apply for automatic transaction interfaces, write automatic transaction commands and interfaces, etc

10. Python for Finance: Mastering Data-Driven Finance

Best Quantitative Trading Books for Beginners
Python for Finance

Python for Finance is the only professional book that explains in detail the use of Python to analyze and process financial data. Compulsory for practitioners in the field of financial application development.

Python, with its simplicity, readability, extensibility, and huge and active scientific computing community, has been widely and rapidly applied in the financial industry that needs to analyze and process large amounts of data and has become the preferred programming language for developing core applications in the industry.

Python for Finance provides techniques and tools for using Python to analyze data and develop related applications. The book is divided into three parts, 19 chapters in total.

Python forfinance is suitable for financial industry developers who are interested in using Python to analyze and process big data.