Qualitative vs Quantitative Trading looks like the same but are different parts of a coin. In technical analysis, qualitative trading helps us to understand the reasons, why the stock market trend is bearish or bullish and also It helps to determine its quality. The quantitative trading method is 100% based on values and parameters.
The qualitative analysis tries to understand human behaviour from the point of view of the person who is looking for information. It looks for the dynamic in a whole world. They gather Information through observation, historical research, and interviews with people who show how they act. Data is translated and reported from the point of view of the researcher’s thoughts about the patterns they see.
A qualitative trader wants to trade based on the emotions of both the trader and the investor. They can use systems based on news-driven patterns that make people feel emotions when they see them. In the market, they look for things that people do that are based on their emotions. They are mostly traders who use their own judgement to make trades based on the emotions of other traders. In order to get an advantage, qualitative traders make up their minds based on their own experience and the patterns they see.
Quantitative analysis is a type of research that looks for facts about social behavior based on statistics. It assumes that there is a fixed and measurable world. They gather data by measuring and putting numbers to the data. Data is analyzed by comparing it to other data and looking for statistical patterns. The data is shown through the lens of statistical analysis.
A quantitative trader uses backtesting, chart studies, and quantified statistical analysis to make smart decisions about how to trade. Quantitative traders are mostly mechanical traders who use quantified entries, exits, and position sizing to trade price patterns that happen again and again in the markets. quantitative traders make money by following their system and the price action no matter what they think, predict, or feel.
Qualitative vs Quantitative Trading
- In market analysis, fundamental analysis is qualitative analysis, and technical analysis is quantitative analysis.
- Technical analysis is quantitative in nature but it can also be 100% quantitative or qualitative.
- Quantitative analysis is a science and Qualitative analysis is an art or skill.
- mechanical trading is the quantitative analysis and discretionary trading is like the qualitative analysis.
- A Qualitative Analysis of stocks analyzes the ‘why’, not the ‘how’ data, focus on the quality, not quantity. A Quantitative Analysis of stocks analyzes the ‘How’, not the ‘Why’ for trading.
Conclusion for Qualitative vs Quantitative Trading
we can customize our trading strategies to suit individual convenience levels by mixing both Qualitative vs Quantitative Trading elements. In trading systems that combine discretionary elements and mechanical elements, there are higher chances that this system can be robust and provide some of the best features of both types of strategies.