Hey, You HFT Bashers! Are You Ready For This?

The quantum computer has been underway for 20 years now. But scientist  are still not sure how to use them in real life, or for what. However, they’ve just made another amazing discovery;  the quantum computer will be  able to run – even with faulty programming and missing components.

“We have no idea what these systems could be used for in the future.”

Sean Barrett

Source: Quantiki.org

Well, I see one obvious possibility – online trading in the financial markets. With one quantum processor placed at the trading desk and the equivalent processor placed at the market, the latency (delay) in transmission of orders will be completely eliminated. Even if the trading desk is several thousand light-years away, orders can be executed instantly. The limitations by the speed of light will be history.

If you think this is some kind of science fiction, or something that belongs to a distant future, you better update you knowledge on computer technology.

The 5 qubits quantum processor, presented by IBM in 2000.

In fact, the first quantum computer was up and running already in 2000 – 10 years ago.

For every month that passes, we get another step closer to manage this advanced and strange technology.

And now it seems like it will a lot easier the scientists previously have thought.

According to a study published in Physical Review Letters the quantum computers will still be able to work, even with a large number of faulty or even missing components.

This surprising discovery brings scientists one step closer to designing and building real-life quantum computing systems — devices that could have enormous potential across a wide range of fields, from drug design, electronics, and even code-breaking, DailyScience.com reports.

In Two Places At The Same Time

Scientists have long been fascinated with building computers that work at a quantum level — so small that the parts are made of just single atoms or electrons.

Instead of “bits”, the building blocks normally used to store electronic information, quantum systems use quantum bits or “qubits“, made up of an arrangement of entangled atoms.

Materials behave very differently at this tiny scale compared to what we are used to in our everyday lives — quantum particles, for example, can exist in two places at the same time.

Qubits in action

“Quantum computers can exploit this weirdness to perform powerful calculations, and in theory, they could be designed to break public key encryption or simulate complex systems much faster than conventional computers,” says Dr. Sean Barrett, the lead author of the study, who is a Royal Society University Research Fellow in the Department of Physics at Imperial College London.

The machines have been notoriously hard to build, however, and were thought to be very fragile to errors.

In spite of considerable buzz in the field in the last 20 years, useful quantum computers remain elusive.

But Dr. Barrett and his colleague Dr. Thomas Stace, from the University of Queensland in Brisbane, Australia, have now found a way to correct for a particular sort of error, in which the qubits are lost from the computer altogether.

Correct Itself

They used a system of  “error-correcting” code, which involved looking at the context provided by the remaining qubits to decipher the missing information correctly.

Dr. Sean Barret explains:

“Just as you can often tell what a word says when there are a few missing letters, or you can get the gist of a conversation on a badly connected phone line, we used this idea in our design for a quantum computer.”

They discovered that the computers have a much higher threshold for error than previously thought — up to a quarter of the qubits can be lost — but the computer can still be made to work.

“It’s surprising, because you wouldn’t expect that if you lost a quarter of the beads from an abacus that it would still be useful,” Barret adds.

The findings indicate that quantum computers may be much easier to build than previously thought, but as the results are still based on theoretical calculations, the next step is to actually demonstrate these ideas in the lab.

Scientists will need to devise a way for scaling the computers to a sufficiently large number of qubits to be viable.

At the moment the biggest quantum computers scientists have built are limited to just two or three qubits.

“We are still some way off from knowing what the true potential of a quantum computer might be,” Barrett notes.

“At the moment quantum computers are good at particular tasks, but we have no idea what these systems could be used for in the future,” he says.

“They may not necessarily be better for everything, but we just don’t know. They may be better for very specific things that we find impossible now.”

What will happen if you use human DNA as input data for a quantum computer?

HFT To The People

The controversial high frequency trading, that now makes up about 70 percent of the total trading volume in the US stock market, belongs to a small exclusive club of financial firms. At the moment, that is.

However, that’s all about to change.

According to the Quantiki.org, the computer speed doubles every 18th month.

The first programmable quantum computer, released by Intel, November 2009.

Leading the race right now is Intel Corp. with its new series of Intel Core processors. The fastest so far, the 10 gigabits per second Light Peak connector, is able to communicate almost at the speed of light.

But according to the magazine PC Pro, Intel have already made the breakthrough in developing a 50 gigabits per second processor, using laser and fiber optical techniques.

The transmitter chip is composed of four hybrid silicon lasers, which fire into an optical modulator that encodes data at up to 12,5 gigabits per second.

At the other end of the link, the receiver chip separates the four optical beams and directs them into photo detectors, that in turn convert the data back into electronic signals.

According to PC Pro, the 10 Gb/sec Peak Light processor is set to arrive at the commercial markets in 2011. The 50Gb/sec is about three to five years away.

Then, even your grandma can be a high frequency trader…

Affordable For Anyone (Almost)

And the HFT industry itself are very keen on getting the race-trading out to the common investors and private day traders.

In fact, “Practical Implementation of High-Frequency Trading Strategies” is the title of a workshop for leaders of HFT firms, November 22 and 23 in Hong Kong and December 9 and 10 in New York.

Peter Van Kleef

In an interview with the FX Trader Magazine recently,  Chief Executive Officer of Lakeview Arbitrage, Peter van Kleef, points out that it doesn’t take much to get into high frequency trading these days:

“These days you can get a brokerage account that gives you an API you can connect to with a minimum deposit of around 2K USD and you can download an open source engine like Marketcetera for free to get you started. Of course there are serious limitations to what you can do with such a low-cost setup but it can get you started on a platform that can grow with your skills and needs. Going forward, you will see university students and even people from high school starting in algo trading from home. Even if you want a state of the art setup, it doesn’t need to break the bank. HFT trading has become affordable for almost anyone.”

About the evolution of HFT on the institutional side, Mr. van Kleef says; “many institutional investors have a fairly long-term horizon and it will take them a long time to understand that some high frequency techniques can benefit them greatly. At the moment many consider it a fad that will pass and therefore don’t engage in the topic. That’s a mistake but then again, the markets are usually a means for wealth transfer from many to a few and not the other way round.”

Well, if you feel you’re ready to jump om the high frequency wagon, I suggest you check out the following websites:

MarketCetera.com

Program-Trader.com

EsperTech.org


Do You See The Light?

The history of computer technology has involved a sequence of changes from one type of physical realisation to another – from gears to relays to valves to transistors to integrated circuits and so on.

As illustrated at the top of the page, the computer speed is now doubling every 18th month.

Can you handle the truth?

Today’s advanced lithographic techniques can create chips with features only a fraction of micron wide. But soon they will yield even smaller parts and inevitably reach a point where logic gates are so small that they are made out of only a handful of atoms.

On the atomic scale matter obeys the rules of quantum mechanics, which are quite different from the classical rules that determine the properties of conventional logic gates.

So if computers are to become smaller in the future, new, quantum technology must replace or supplement what we have now.

The point is, however, that quantum technology can offer much more than cramming more and more bits to silicon, multiplying the clock, speed of microprocessors and make electronic trading many times faster than today’s high frequency systems.

It can support entirely new kind of computation with qualitatively new algorithms based on quantum principles.

It also means (among several other things) the possibility to be in two places at the same time. A realization on the “earth is round – not flat”-level.

Now, take a minute to think about this…

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