Key components of a quantitative trading strategy

Probably the simplest ever structure of quantitative trading strategy was proposed in a book “Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading” by Rishi K. Narang:

So, according to this model, basically each strategy consists of the following components:

Alpha model.

Alpha model consists of some sort of rules or predictive factors that derive the active value of the strategy.

Risk (constraints) model.

Risk model has some sort of constraints, for example, how much we...