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Decoding Stock Market Behavior with the Topological Quantum Computer

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  • Ovidiu Racorean

Abstract

A surprising image of the stock market arises if the price time series of all Dow Jones Industrial Average stock components are represented in one chart at once. The chart evolves into a braid representation of the stock market by taking into account only the crossing of stocks and fixing a convention defining overcrossings and undercrossings. The braid of stocks prices has a remarkable connection with the topological quantum computer. Using pairs of quasi-particles, called non-abelian anyons, having their trajectories braided in time, topological quantum computer can effectively simulate the stock market behavior encoded in the braiding of stocks. In a typically topological quantum computation process the trajectories of non-abelian anyons are manipulated according to the braiding of stocks and the outcome reflects the probability of the future state of stock market. The probability depends only on the Jones polynomial of the knot formed by plat closing the quantum computation. The Jones polynomial of the knotted stock market acts, making a parallel with the common financial literature, in a topological quantum computation as a counterpart of a classical technical indicator in trading the stock market. The type of knot stock market formed is an indicator of its future tendencies.

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  • Ovidiu Racorean, 2014. "Decoding Stock Market Behavior with the Topological Quantum Computer," Papers 1406.3531, arXiv.org.
  • Handle: RePEc:arx:papers:1406.3531
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    File URL: http://arxiv.org/pdf/1406.3531
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    References listed on IDEAS

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    1. Ovidiu Racorean, 2014. "Crossing Stocks and the Positive Grassmannian I: The Geometry behind Stock Market," Papers 1402.1281, arXiv.org, revised Feb 2014.
    2. Ovidiu Racorean, 2014. "Braided and Knotted Stocks in the Stock Market: Anticipating the flash crashes," Papers 1404.6637, arXiv.org, revised Jun 2014.
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    Cited by:

    1. Ovidiu Racorean, 2015. "Quantum Gates and Quantum Circuits of Stock Portfolio," Papers 1507.02310, arXiv.org, revised Jul 2015.

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    1. Ovidiu Racorean, 2015. "Quantum Gates and Quantum Circuits of Stock Portfolio," Papers 1507.02310, arXiv.org, revised Jul 2015.
    2. Ovidiu Racorean, 2014. "Braided and Knotted Stocks in the Stock Market: Anticipating the flash crashes," Papers 1404.6637, arXiv.org, revised Jun 2014.

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