Functional Analysis for Derivatives Trading: Is it Beneficial?

In summary, the individual is considering taking a class on functional analysis and is unsure if it will be useful for their career in derivatives trading. They mention that functional analysis involves infinite dimensional calculus and linear algebra, and may be helpful for understanding curves on surfaces. They are not sure if derivatives trading utilizes functional analysis, but believe that having a strong understanding of math may be beneficial for the field. However, they also acknowledge that derivatives trading is a speculative and unpredictable pursuit. They are seeking advice and recommendations from individuals who are knowledgeable about their program and career needs.
  • #1
barksdalemc
55
0
I am thinking about taking a class on functional analysis. I am eventually planning on doing derivatives trading as a career. Is this class worth taking or should I try to find something more applied. I guess I am saying that I don't see how applied functional analysis is.
 
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  • #2
why are you thinking about taking it? did someone recommend it? could you ask them why? you need to talk to the people who are aware of yiour needs for your program.i know people in economics doctoral programs who used some elementary concepts from functional analysis. but the subject is basically infinite dimensional differential and integral calculus.

since differential calculus is about approximating non linear functions by linear ones, a necessary preliminary part of functional calculus is infinite dimensional linear algebra.

it also involves integral operators with functional "kernels". i.e. it is calculus on spaces whose "points" are functions. e.g. a basic problem is to examine curves on a given surface and determine the shortest ones.

i do not know if infinite dimensionsl analysis is really used in derivatives trading. but if you can handle func analysis, you might be good at derivatives trading. isn't that a rather speculative and unpredictable pursuit?
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  • #3
It most likely is. I've used the general rule of thumb that more math is always better. In this case it may be a waste of time.
 

Related to Functional Analysis for Derivatives Trading: Is it Beneficial?

1. What is functional analysis for derivatives trading?

Functional analysis for derivatives trading is a method used by traders to analyze and assess the performance of financial derivatives, such as options, futures, and swaps. It involves using mathematical and statistical techniques to evaluate the underlying factors that affect the value of these instruments.

2. Is functional analysis beneficial for derivatives trading?

Yes, functional analysis can be highly beneficial for derivatives trading. By understanding the underlying factors that affect the value of derivatives, traders can make more informed and strategic decisions, leading to potentially higher profits and lower risks.

3. What are some common techniques used in functional analysis for derivatives trading?

Some common techniques used in functional analysis for derivatives trading include regression analysis, time series analysis, and correlation analysis. These techniques help traders identify patterns and trends in the data, which can inform their trading decisions.

4. How does functional analysis differ from technical analysis in derivatives trading?

Functional analysis and technical analysis are both used to analyze financial markets, but they approach it from different perspectives. While technical analysis focuses on market trends and price patterns, functional analysis looks at the underlying factors that drive these trends and patterns.

5. Are there any drawbacks to using functional analysis for derivatives trading?

One potential drawback of using functional analysis for derivatives trading is that it relies heavily on historical data and assumptions about market behavior. This means that it may not always accurately predict future market movements or account for unexpected events. Additionally, functional analysis can be complex and time-consuming, requiring a high level of expertise and resources.

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