How quantum mechanics can help negotiate the stock market

If you are familiar with the algorithms at play for social media platforms to ply you with advertisements, know that you too can use the technique to sift through the data the internet throws at you to tailor them to your needs and interests. Stock market is one place where the magic of algorithms is being increasingly captured. Technical trading in the stock market, done by analysing candlestick charts and the hidden demand supply forces, can also be done by deploying the knowledge of relative theory and quantum physics.

Quantum trading

Put simply, this uses computing algorithms and principles to negotiate the financial market. It brings physics theories into stock trading.  Unlike every other form of technical trading strategy, it is not a defined concept. Rather it is a roadmap that allows you to explore the enigmatic stock market. Quantum concepts have helped people understand how everything that exists in the world is created and functions almost in the same manner. With the advancements in the studies, the experts have now found a way to connect financial markets with concepts of quantum mechanics. This has helped people view the market from different perspectives, making it easy for them to analyse the technical candlestick charts. 

The borrowed principles

The law of uncertainty: Quantum mechanics first discovered and stated that the absolute place of a particle cannot be identified with utmost precision. This means there is always uncertainty in the particle. Similarly in the financial market and stock market, nothing is stable and it works parallel with the principle of quantum mechanics. The uncertainty in the stock market is stimulated by financial news, demand and supply, and economic events.

Entanglement and interconnectedness: In quantum mechanics, interconnectedness refers to the phenomena of entanglement between two or more particles. These entanglements make both particles codependent on each other, resulting in the cooperative nature of working. When we compare this with the stock market, it can be seen how demand and supply are completely connected.

The demand and supply of the stocks are inversely proportional to each other. Once you’ve learnt to identify where the reliable demand zone or supply zone is forming you can make good profits out of it with tested strategy. 

Quantum inspired algorithm & analysis 

Researchers have been relating the concepts of superposition and parallel processing of quantum mechanics with technical trading to design algorithms. These algorithms aim to improve the trade strategies of the trader with automation. It is possible by taking into account the wide data of the stock market and speculating on each and every move. 

The concept of superposition allows technical traders to consider different possibilities in the stock market at once. Further, the concept of parallel processing considers multiple computations at once. 

By leveraging these concepts of quantum mechanics traders can navigate the market better. The core reason behind this is, that they can consider the hidden opportunities, and the automated practices can help them in implementing their methods. Furthermore, improved risk management can also be applied with the help of these algorithms. 

A parting advice

It is critical to proceed with caution when considering the link between quantum mechanics and the stock market.
Parallels between the two fields are frequently based on abstract concepts and analogies rather than actual scientific links. The application of quantum principles in financial analysis and trading methods is still under investigation, and practical implementations of quantum-inspired approaches to understanding or predicting market behaviour are in their early phases.

(The writer is Founder and Managing Director, Get Together Finance)