SchrÃ¶dinger Equation

June 26th, 2015, 08:34 PM

I was watching the Quantum Physics episode on NOVA when they brought up an interesting topic. During an experiment a particle/electron was shot out of a "gun." Scientists could never pinpoint exactly where it would end up.

Long story short, the Austrian physicist Erwin Schrödinger determined that you could never know exactly where it would be, however you could use a mathematical equation to determine the most probable location the particle might end up if looked for in said location.

You cant know where, for certain, but you can figure out the best place to look.

After watching this I couldn't help see the similarity between the problem above and the problem of PRICE. Every trader cannot know where price will be for certain, but we can use tools to to estimate where we think price will be in the future.

If any quants are around, maybe one could show us how to apply the Schrödinger equation in a lucrative way lol. Just some physics food for thought.

June 26th, 2015, 11:03 PM

I feel like virtually everything in life is like that. We live in a probabilistic Universe.

July 6th, 2015, 05:19 AM

Yep, it's all "just" probability distributions. You could model price as a "ridge" formed by e.g. a series of (mixtures of) gaussian distributions in price/time/propbability space. The problem is in predicting (the "forces" that create) the probability distributions in advance.

SchrÃ¶dinger Equation

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Schrödinger Equation