Econophysics Techniques and Their Applications on the Stock Market

Exact sciences have achieved many results, validated in practice. Although their application in economics is difficult due to the human factor involved, the lack of conservation laws, and experimental difficulties, it must be highlighted that the consistent bibliography gathered in recent years in t...

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Bibliographic Details
Main Authors: Florin Turcaș, Florin Cornel Dumiter, Marius Boiță
Format: Article
Language:English
Published: MDPI AG 2022-03-01
Series:Mathematics
Subjects:
Online Access:https://www.mdpi.com/2227-7390/10/6/860
Description
Summary:Exact sciences have achieved many results, validated in practice. Although their application in economics is difficult due to the human factor involved, the lack of conservation laws, and experimental difficulties, it must be highlighted that the consistent bibliography gathered in recent years in this field encourages the econophysics approach. The objective of this article is to validate and/or define a few stock strategies, based on known results from mathematics, physics, and chemistry. The scope of this research demonstrates that statistics (in portfolio theory), geometry (in technical analysis), or financial mathematics can be used in the capital market. Many of the exact science results corresponded to strategies applicable to investors. Unlike the material world, financial markets have additional components that must be considered: human psychology, sociology at the firm level, and behavioral unpredictability. The findings obtained in this research enable the enormous vastness of the exact science results that can be a fertile source for new investment strategies. This article concludes that in order for mathematical theories to be applied to the stock market, it is essential that the start-up conditions (initial assumptions) are validated in the market.
ISSN:2227-7390