Quant Finance Glossary

Essential concepts for quant trading, research, and interviews — explained clearly.

Concepts

Central Limit Theorem

The Central Limit Theorem states that the sum (or average) of a large number of independent random variables tends toward a normal distribution, regardless of the original distribution shape.

8 min read

Math FoundationsIntermediate

Markov Chains

A Markov chain is a stochastic process where the probability of transitioning to the next state depends only on the current state, not on the history — the 'memoryless' property.

10 min read

Math FoundationsAdvanced

Stochastic Calculus

Stochastic calculus extends classical calculus to handle random processes, providing the mathematical foundation for derivatives pricing models like Black-Scholes and modern quantitative finance.

14 min read

Math FoundationsAdvanced

Brownian Motion

Brownian motion (Wiener process) is the continuous-time random process that models the random component of asset price movements and is the foundation of the Black-Scholes model and stochastic calculus.

10 min read

Math FoundationsBeginner

Random Walk

Random walk theory suggests that stock price changes are independent and identically distributed, meaning past prices cannot predict future movements — a foundational concept in financial economics.

7 min read

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