Quantum Advantage in Trading: A Game-Theoretic Approach

TL;DR

This paper demonstrates a quantum advantage in trading strategies using quantum game theory implemented on an ion-trap quantum computer, leading to higher-paying market equilibria and potential alpha generation.

Contribution

It introduces quantum game-theoretic models for trading and experimentally demonstrates their advantage on a quantum computer, a novel application in finance.

Findings

Quantum advantage achieved in trading models.

Higher-paying market Nash equilibria identified.

Potential for uncovering alpha in trading strategies.

Abstract

Quantum games, like quantum algorithms, exploit quantum entanglement to establish strong correlations between strategic player actions. This paper introduces quantum game-theoretic models applied to trading and demonstrates their implementation on an ion-trap quantum computer. The results showcase a quantum advantage, previously known only theoretically, realized as higher-paying market Nash equilibria. This advantage could help uncover alpha in trading strategies, defined as excess returns compared to established benchmarks. These findings suggest that quantum computing could significantly influence the development of financial strategies.