VI. Miscellaneous Quant Topics
VI. Miscellaneous Quant Topics · 07. February 2024
In trading, the "Observer Effect," akin to Heisenberg's Uncertainty Principle, reflects how traders' analyses influence market prices. This metaphorical concept shows that collective actions, like buying based on beliefs or technical analysis, can create self-fulfilling prophecies, driving prices and shaping market trends.
#TradingPsychology #MarketAnalysis #FinancialMarkets #ObserverEffect #QuantumMetaphor
VI. Miscellaneous Quant Topics · 13. November 2023
Discretization translates continuous financial models into numerically solvable steps, crucial for derivative pricing and risk management. It simplifies complex models, enabling simulations like Monte Carlo for exotic options while introducing some approximation error. #QuantitativeFinance #DerivativesPricing #NumericalMethods
VI. Miscellaneous Quant Topics · 03. October 2023
Log returns, derived from natural logarithms of price ratios, offer precision and are additive over time, unlike arithmetic returns. Owing to the Central Limit Theorem, they tend to be normally distributed, aiding in robust financial modeling and risk management. They also prevent negative asset price implications. #Finance #RiskManagement