Physicists Use Science Research Methods for Trading Strategies

October 7, 2003 ( - A handful of physicists and astrophysicists have unveiled an alternative investment firm using complex trading models designed to exploit the markets' trading inefficiencies.

According to a news release, the Cambridge, Massachusetts-based Financial Labs is slated to first release a managed account product using a directional strategy – Darwin-FX – that is to be applied to the foreign exchange markets.   The strategy taps a hedging system that ensures optimal diversification among the G7 currencies, the announcement said.

Aaron Sokasian, a founder of the company and manager of the research team, said that the rationale for launching the firm centered on tapping the objective approach that scientists use in solving complex problems.   Among the strengths the team brings is its ability to analyze large datasets and extract a desired statistical result, Sokasian contended.

In addition to trading models, Financial Labs will develop hedging systems that maximize diversification for any trading strategy, the news release said.