Inside the Black Box: The Simple Truth About Quantitative Trading

12.3. EVALUATING THE ACUMEN OF QUANTITATIVE TRADERS

If I have tried to stress anything in this book, it is that the judgment of a quant trader pervades the strategy she builds. So, an evaluation of the quant's skill and experience in the fields relevant to the trading strategy is obviously important, but it is also easier said than done. This section outlines a few tools that can be used to determine the skill level of quant traders.

The people developing and managing quant strategies should be well trained in the methods they use. At least some members of the team should have substantial live experience in areas of quant trading relevant to the strategy they are currently pursuing. Experience helps drive good judgment, especially in light of the massive array of subtleties and traps inherent in the process of research and trading. From a dispositional standpoint, quants should be careful and cautious in their analysis, and they must be humble about their ability to predict the future. There are considerable hurdles to doing quant trading well, such as polluted data and constantly improving competition. A good quant does not underestimate such challenges. The reality is, however, that evaluating whether scientists know what they are talking about at a deep level is not the easiest task for someone who is not technically proficient. As such, to make a judgment, one may have to rely on the quant's qualifications and experience, reputation, history of success, and analyses of the ...