Oh No! Quantum Trading Is Back
About 10 years ago or so, when the world woke up to quantum tech, I suffered through a wave of articles claiming that entangled particles can communicate with each other faster than the speed of light. Because, they’d say, that’s Einstein’s spooky action at a distance. And that this could be used to make a lot of money on the stock market by beating even high-speed traders.
Then, last week, I saw that New Scientist published an article about how quantum tech is going to revolutionize the stock market. I had a look at the paper. It’s both better and worse than I thought.
First of all, it’s true that stock trades work close by the speed of light limit. I have to admit that the first time I heard about this, I found it hard to believe — but if you think about it, it makes sense. The faster you can collect information, and buy and sell based on it, the better your chance of making a profit.
If your algorithm predicts that a stock is going to tank, but the algorithms of all other hedge fund managers predict the same, then it matters how quickly you can send information to the next closest stock market. Every microsecond matters. It’s like a high-stakes game of musical chairs, but instead of music stopping, it’s your retirement savings.
Incidentally, I have a friend who told me that since he got fibre-optic cables he has an edge on booking a golfing slot. Same spirit, just without the billions.
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