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by QML 3115 days ago
So TL;DR the market isn’t as efficient as most would believe it is.

That makes sense since the market is ran by humans; but what if it was solely managed by a computer.

While reviewing for a final, I learned that computers are extremely fast at detecting negative cycles. An application of this? Arbitrage.

If you graph the foreign exchange market with each vertex being a currency and a directed edge being an exchange rate, applying the logarithm operator to each edge and then running a DFS transversal, it would be possible to find paths of arbitration.