What Is Systematic trading?

Systematic trading is a method of trading financial markets that utilises mathematical models and algorithms to execute trades based on predefined rules and conditions. It aims to remove emotion and subjectivity from the investment process by relying on data-driven decision making.

In systematic trading, trades are executed automatically based on the rules established in the trading system. These rules can be based on technical indicators, market data, or other signals, and are designed to identify and take advantage of market inefficiencies and price discrepancies. The models used in systematic trading are typically back-tested using historical market data to assess their viability and refine their parameters.

Systematic trading is often used in quantitative finance and high-frequency trading, where trades are executed at a high rate and on a large scale. It can be applied to a wide range of financial instruments, including stocks, bonds, futures, options, and currencies.