012 - Sanjeev Lakhanpal & Dr Paul Netherwood of Horizon3 Investment Management (Part I)
Digital Signals in the Noise Part 1 of 2
In this first part of a two-part series, we delved into the world of systematic trading with Sanjeev Lakhanpal and Dr. Paul Netherwood from Horizon3 Investment Management. The conversation provided a deep exploration into the complex and innovative strategies used in quantitative trading.
Sanjeev shared his journey from a background in physics and finance to a dynamic 30-year career in trading and quantitative analysis. His path, which began in a support role at AHL, illustrated the multifaceted and unpredictable nature of the financial markets.
Dr. Paul Netherwood, with a strong foundation in computer science and AI, brought a unique perspective shaped by his experiences in diverse fields such as the Human Genome Project and military software development. His transition to AHL and subsequently to Horizon Capital highlighted the varied and intriguing routes available in the domain of quantitative trading.
A significant focus of the discussion was on the application of Digital Signal Processing (DSP) in trading. This innovative approach, adapting a technique from engineering, allows for sophisticated analysis of financial markets, offering insights beyond traditional backtesting methods. DSP is used to decipher meaningful patterns from amidst the noise in market data, thus providing a theoretical framework for understanding market dynamics.
The combination of DSP with pattern recognition was emphasized as crucial for addressing both linear and nonlinear aspects of market data. This fusion enables a more nuanced and adaptive approach to market trends, enhancing the capability to interpret complex market behaviours.
Practical aspects of their methodology, such as the utilization of various data frequencies and the pursuit of consistent model performance, were also discussed. The conversation highlighted the importance of recognizing the limitations of models and adapting strategies to accommodate these constraints.
This first part of the series offered an enlightening glimpse into the intellectual challenges and innovative strategies in quantitative trading. It underscored the importance of innovation and adaptability in finance, especially in the pursuit of refined and informed trading strategies.
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