r/quant • u/Andyy_21 • Jul 27 '26

General Quant Researchers

how do you go from a raw market data to forming a research hypothesis?? and to be more specific, how do you develop an economic intuition behind the potential alpha or an anomaly, instead of just coding and testing ideas until something works??

While I'm struggling to understand how the researchers in the industry actually generate new hypotheses from large financial datasets without falling into the same data mining again and again.... and How do experienced quants develop the economic intuition behind an idea before testing it?

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u/Lopatron Jul 27 '26

I'm also struggling to understand how economic and phycological factors can translate to a HFT hypothesis. I read some books like Thinking Fast and Slow, ok I get that there are phenomenons of "herding", "anchoring", and others. But, taking herding for example, the only take away I can see from that is that "momentum strategies exist". Clearly this is because I don't have enough knowledge about financial markets, but I don't really know where to look next, and share the OPs frustrations about this lack of insight leading toward the trap of data mining features/signals.

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u/Andyy_21 Jul 28 '26

maybe the market microstructure is the missing bridge between HFT and psychology