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Trading Analytics terms
Quant strategies, signals, backtests, indicators and market microstructure.
Algorithmic trading Using computer programs to automatically place and manage trade orders based on predefined rules. Alpha decay The tendency of a trading signal's predictive power and profitability to weaken over time as more traders exploit it. Alternative data Non-traditional data sources, such as satellite imagery or card transactions, used to generate an investing edge. Backtesting Testing a trading or investment strategy against historical data to see how it would have performed. Bid-ask spread The gap between the highest price buyers will pay and the lowest price sellers will accept for an asset. Implied volatility (IV) The volatility level that, plugged into an options pricing model, reproduces the option's current market price. Order book A real-time list of all outstanding buy and sell orders for an asset, ranked by price. Point-in-time data Data reconstructed exactly as it appeared on a given historical date, including figures that were later revised. Quantitative trading Trading strategies built on mathematical models and statistical analysis rather than discretionary judgment. Technical analysis Forecasting future price movement from historical price and volume patterns rather than company fundamentals. Transaction cost analysis (TCA) Measuring the real cost of executing a trade, including spread, market impact, and timing, versus a benchmark. Volatility The degree to which an asset's returns fluctuate over time, the standard proxy for investment risk.