Quantitative Analysis

A quantitative analyst is a person who works in finance using numerical or quantitative techniques. Similar work is done in most other modern industries, but the work is not always called quantitative analysis. In the investment industry, people who perform quantitative analysis are frequently called quants.

Although the original quants were concerned with risk management and derivatives pricing, the meaning of the term has expanded over time to include those individuals involved in almost any application of mathematics in finance. Examples include statistical arbitrage, algorithmic trading, and electronic market making and MBA. Trading and sales operations, quants work to determine prices, manage risk, and identify profitable opportunities. Historically this was a distinct activity from trading but the boundary between a desk quant and a quant trader is increasingly blurred, and it is now difficult to enter trading as a profession without at least some quant education. In the field of algorithmic trading it has reached the point where there is little meaningful difference. Front office work favor a higher speed / quality ratio, with a greater emphasis on solutions to specific problems than detailed modelling. FOQs typically are significantly better paid than those in back office and risk, and in model validation. This has obvious implications for the quality of decisions at a strategic level. Although highly skilled programmers, time constraints mean that complex decisions are made using Excel and ad-hoc tools.