Why hedge funds investment banks prop shops want physics to apply math principles to their quant algo research trading?
As I learn through Khan Acadeym for things like work, acceleration, particle movement, I thought this was very similar characteristics of quant research. Personally I do see a relationship but others including London Quant don’t quite agree. I want to see your opinion. so comment below.
LQ says they physcists are wanted to because they know how to build models and see through their faults as well. I find this concept interesting but everyone seems to disagree there is no relationship. What do you think? Join my FREE newsletter to see what others think
There are two camps.
The Dermans and the Sorrettes
The Dermans think that the model will break down due to the human behavior feedback loop.
The Sorrettes think that the model will approximate overall phase shifting dynamics.
I think that both are right. That is why I believe that chaos theory and tangential themes are closer to modeling the market.
In terms of physics models, there is power in analogies and a weakness too when applied to finance. But techniques in physics for understand complex systems, like quantum levels, are useful in phase transitions in complex dynamic systems - aka the market.
Paul Cottrell, MBA, ABD
This links may be useful for some of my learning
I really wish math gurus could speak plain English instead of this useless mumbo jumbo