Quant Finance Glossary

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

Concepts

Expected Value

Expected value is the probability-weighted average of all possible outcomes of a random variable, forming the mathematical foundation for every rational trading and betting decision.

7 min read

Probability & StatisticsBeginner

Bayes' Theorem

Bayes' theorem provides a mathematical framework for updating the probability of a hypothesis as new evidence becomes available, making it central to both quant interviews and trading decision-making.

8 min read

Probability & StatisticsBeginner

Conditional Probability

Conditional probability is the probability of an event occurring given that another event has already occurred, forming the basis for Bayesian reasoning and many quant interview questions.

7 min read

Probability & StatisticsBeginner

Normal Distribution

The normal (Gaussian) distribution is the bell-shaped probability distribution that appears throughout statistics, finance, and natural science, characterized by its mean and standard deviation.

8 min read

Probability & StatisticsBeginner

Law of Large Numbers

The Law of Large Numbers states that as the number of trials increases, the sample average converges to the expected value — the mathematical justification for why systematic trading works.

6 min read

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