Can quantum computers be used for trading?
Technology
Quantum computing is starting to gain traction and is now being applied in different industries.
Today we are going to look at research on the application of quantum computing to trading!
Dr. Valerii Salov makes the point that; “The number of unique trading strategies with a limited number of futures contracts on short and long positions exponentially grows with the number of ticks. The latter reaches today in daily sessions hundreds of thousands.”
As a result of such an enormous growing dataset of trading strategies, Dr. Salov makes Richard Feynman’s point on working with such gigantic datasets, that:
“because it has too many variables, it cannot be simulated with a normal computer.”
And as a result Dr. Salov suggests that:
“A quantum algorithm for the set is suggested.”
A quantum computer is a type of computer that uses the principles of quantum mechanics to perform calculations. Unlike classical computers that store information in bits that can be either 0 or 1, quantum computers use quantum bits, or qubits, which can represent both 0 and 1 at the same time. This phenomenon became known as superposition and is one of the fundamental principles of quantum mechanics.
In addition to superposition, quantum computers also take advantage of a process called entanglement. Entanglement is a phenomenon where two particles can become correlated in such a way that the state of one particle is dependent on the state of the other particle. Allowing quantum computers to perform certain calculations much faster than classical computers.
The basic building block of a quantum computer is a quantum gate.
A quantum gate is a device that operates on one or more qubits to perform a specific operation. Quantum gates can perform a wide range of operations! Such as the NOT gate (which flips the state of a qubit), the Hadamard gate (which creates a superposition of two states). And the CNOT gate (which entangles two qubits).
To use a quantum computer, a user must first encode their problem as a series of qubits. This encoding process becomes known as quantum state preparation. The qubits then become manipulated as a result of a series of quantum gates to perform the desired calculations. Finally, the result becomes read out by measuring the qubits.
In conclusion, one of the biggest challenges of building a quantum computer is maintaining the coherence of the qubits. Any interaction with the environment can cause the qubits to lose their coherence and collapse into a classical state. Thus, to address this challenge, quantum computers typically operate at very low temperatures. And lastly become shielded from external sources of interference.
Dr. Salov told Rebellion; “Despite a more than forty-year history of quantum computing, dating back to the pioneering works of Manin 1980, Feynman 1982, Deutsch 1985, the field remains a baby in diapers in practical terms due to technical difficulties. The boom in publications cannot hide the fact that the number of new quantum algorithms can be counted on the fingers. Theoretical saturation with new algorithms, allocation of problems, where quantum computing will give effect, and possibility to test results even today on still artificially reduced tasks, serving as a proof of possibility itself, will inevitably lead to contact of theory and practice. Economics, markets, and trade simply will not be able to stay away.”
Read Dr. Salov’s full paper:
A Quantum Algorithm for Trading Strategies with Position Limits by Valerii Salov :: SSRN
Can quantum computers be used for trading?
