Why QM Physics are USELESS in Stock Market modeling

Discussion in 'Technical Analysis' started by harrytrader, Oct 4, 2003.

  1. I said in the thread "Market and quantum effect" :

    If I wanted to discuss QM Physics in stock market the title of the thread would rather be "why QM Physics are USELESS in Stock Market modeling" I mean not more usefull than a toy model like a brownian motion model which serves only as a simplist surrogate for explaining the behavior of market but use only this model for trading then you have to face a martingale process - since brownian model is the typical one mathematically - ."

    I won't develop myself I will rather let you guess why I said that through this interview of Nassim Taleb (I often agree with him that's why I quote him often although I don't agree with him as for seeing the market as noise with "accidental" jumps see also http://www.elitetrader.com/vb/showthread.php?s=&threadid=22833&perpage=6&pagenumber=5 where I talk about a generating random process with poisson law process to simulate jumps):


    DS: You're not ready to give up on all quantitative techniques. You were trained as an econometrician. You don't make wild speculative bets and I assume you try to hire traders who have some kind of quantitative skills.

    NT: When you take extremely quantitative trainees, particularly from the physical sciences, and try to make them arbitrage traders, they freak out and become pure gamblers. They can't see the edge, and they become the sitting ducks. The world has too much texture, more than they can squeeze into the framework they're used to. I see a huge incidence of pure speculative gambling on the part of these people who are hired on the strength of their knowledge of quantitative methods.