22 ms·
A quantum walk down Wall Street
- andreareina 5y agoThis sounds like something to be solved by agent-based simulations that don't need any quantum woo. What am I missing?
- snthpy 5y agoThe end of the article talks about valuing call options. I took a graduate course on Path Integrals for Derivatives Pricing in 2001 or 2002 so nothing new there. Since I didn't become a bank quant I never had any use for it. Linear models are much used on the buy side. Agree with the Nick Patterson quote below which says the same. Hard to tell what the book is about. Sounds a bit like a Deepak Chopra take on economics. Throw a few mentions of "quantum" in there to sell books.
- vmception 5y agoThis doesn’t seem accurate, many newer physics theories are used heavily in finance. I would say its mostly in communication. People set up laser beam networks on rooftops to get faster pricing data. The processors and hardware are all pushing for faster reading and trading, with continual research at the physical level. Some formulas still go into financial models or back into physics. Just like the article started off its examples with.
- throwaway210222 5y agoThe uses of advanced laser networking kit is to to gain an advantage in front-running. Which is to say, to get your brokerage's orders in ahead of a large institutional order. IOW: Legally-sanitised insider trading.
- vmception 5y agoI don’t care. Maybe informative for others. My actual opinion on that is that you used to have to go to the square where people were exchanging. People farther distances away simply were not there and had to wait in the newspaper to know what happened with prices. I don’t consider advances in communication to be controversial in that regard. I do think people should be aware of who sees their communications.
- amelius 5y agoThe problem is that you need an increasing amount of capital to trade. It raises the barrier to entry.
- djbebs 5y agoThats not true at all
- amelius 5y agoWhy is that? You have to own some laser networking kit in a line-of-sight to play along. That costs money.
- bidirectional 5y agoNot 'to trade' but to enter the small world of HFT. Many, many industries have capital barriers to entry, I don't really see the big deal. Just as I cannot start an HFT firm, I also cannot start a toy factory or restaurant without sufficient capital. If you actually look at how much money HFT firms earn relative to the finance sector as a whole, they're pretty small fish. They just pay a lot because they have relatively few staff.
- throwaway210222 5y agoThe dogy bit is knowing that a large institutional order is coming.
- deleted 5y ago[deleted]
- acidbaseextract 5y agohttps://archive.md/Ye8v3 https://archive.md/Ye8v3
- neonate 5y agohttp://web.archive.org/web/20211108075421/https://www.economist.com/finance-and-economics/2021/11/06/a-quantum-walk-down-wall-street http://web.archive.org/web/20211108075421/https://www.econom...
- Ice_cream_suit 5y agoRenaissance Technologies is rumoured to use methods from topological quantum field theory. They are fiercely and aggressively secretive, so no one really know for sure. However, their founder worked in that field before moving to business: https://en.wikipedia.org/wiki/Chern%E2%80%93Simons_theory https://en.wikipedia.org/wiki/Chern%E2%80%93Simons_theory Famously, he was sacked by the NSA for giving an interview opposing US involvement in the Vietnam war.
- matheweis 5y agoNick Patterson, formerly a senior statistician at Rentech, was on a podcast saying that their most important tool was a simple regression. I suppose he could’ve been lying, but the believable accounts suggest that the majority of their magic is simply having smart people use simple tools very, very well.
- dahak27 5y agoI think this is right - my experience as JS and similar places is that really understanding your data-generating process and the nitty-gritty assumptions of your data/simple model makes a huge difference E.g knowing what's causing missing values in your data and what implications various fixes on that might have on bias in your linear regressor is probably way way more valuable than fitting some shiny non-linear toy
- abzug 5y agoDo you have a link to this podcast? Or just the name.
- matheweis 5y agoTalking Machines: AI Safety and The Legacy of Bletchley Park http://www.thetalkingmachines.com/episodes/ai-safety-and-legacy-bletchley-park http://www.thetalkingmachines.com/episodes/ai-safety-and-leg... Transcript with time stamps by @clausok: https://news.ycombinator.com/item?id=19065226 https://news.ycombinator.com/item?id=19065226
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- massinstall 5y agoHaving worked in the industry for almost 25 years (in options trading), I must comment that the general quality of the article, and the author’s apparent level of understanding of the industry and options are highly questionable.
- cercatrova 5y agoSounds like the Gell Mann amnesia effect. https://en.wikipedia.org/wiki/Michael_Crichton#GellMannAmnesiaEffect https://en.wikipedia.org/wiki/Michael_Crichton#GellMannAmnes...
- whytaka 5y agoDo you have a link to any article related to your industry that you found insightful and erudite but still accessible to outsiders of finance? Not complete novices, but maybe an intermediate-level familiarity to the industry.
- tubby12345 5y agohttp://isomorphisms.sdf.org/maxdama.pdf http://isomorphisms.sdf.org/maxdama.pdf
- saltedonion 5y agoWhat is this exactly? Looks both interesting and intense
- perpetualpatzer 5y agoThe linked pdf contains notes explaining HFT circa ~2011. The About section explains it's sourced from the author's blog, and was also used as lecture notes for an undergrad course. I've not read the whole thing, but at a minimum, the brainteasers contain some good nerd-sniping content. For those wanting more recent additions, the author seems to have more updated thoughts here[1], as linked on the LinkedIn profile to which their former blog redirects. [1] https://blog.headlandstech.com/2017/08/03/quantitative-trading-summary/ https://blog.headlandstech.com/2017/08/03/quantitative-tradi...
- GDC7 5y agoI feel like people should separate RenTech and Medallion. RenTech funds which are not Medallion have experienced losses similar to any other . The idea is great: looking at past events to understand how a particular event such as a sunny day in Manhattan or what did the Yankees do the night before (and millions of other things) influences the price of a stock. If you have enough data you can go back and test if a signal is really a signal or just random coincidence. But somehow it's not working as well as it sounds on paper, I think one of the reason might be that signals like that are very weak and they fade over time so you need leverage to make sure that you cash in while the signal there (because it's weak and subtle) and also you end up losing a bunch of money by chasing a signal which is on its way out.
- bsedlm 5y agoI like to think about Natural numbers as a basis for money (accounting) giving way to Integer numbers as a basis for money (banking). Going on along this trend, one gets to Real numbers (Finance? trading stock?) and so until modernity with Complex numbers as the basis for money (global financial? trading options and other derivatives?)
- trylfthsk 5y agoRelativistic trade: Quaternions