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The Axiomatic Trader: Latent Regularity, Information Budgets, and the Canonical Form of a Quantitative Investment System

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  • Jiayu Li

Abstract

Systematic trading rests on one article of faith: that regularities found in the past persist. We state it as a time-invariant mechanism driven by an unobserved latent state, and show that it leaves a researcher five constants to declare --- the recurrence bound $Lambda$ at a block length $b$, the invariance defect $epsilon_0$ of the representation it is declared of, the coherence times $ell_i$ of the state's coordinates, the signal ceiling $rho$ and the fraction $kappa$ of it contingent on the regime --- after which the architecture of a correct quantitative investment system is nearly forced.

Suggested Citation

  • Jiayu Li, 2026. "The Axiomatic Trader: Latent Regularity, Information Budgets, and the Canonical Form of a Quantitative Investment System," Papers 2608.23416, arXiv.org.
    • Handle: RePEc:arx:papers:2608.23416
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