Reassessment of the Concept of Momentum in Econophysics

Mario J. Pinheiro and Mario Rodrigo Afonso Pinheiro
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Mario J. Pinheiro: Universidade de Lisboa, Portugal
Mario Rodrigo Afonso Pinheiro: EconoDynamics Group, Portugal

European Journal of Applied Physics, 2021, vol. 3, issue 6, 25-35

Abstract: We examine the most basic feature of the economic process - momentum - under the point of view of analogies with physical laws, as they were reformulated recently [1]. Our approach is applied with minimal assumptions and we conclude that the inclusion of entropy as an effective variable in econophysics may bring a new vision of economic progress and the possibility to harness economic waves as a means to transport development from rich to poor countries using trade and technological progress. A new technical indicator for the stock market is proposed offering double opportunities on enter and exit trades, when compared to the Relative Strength Index usually used in analysis of financial markets.

Keywords: Black-Scholes formula, Econophysics; Options; Quantitative finance; Risk measures; Standard deviation; Technological progress (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:epw:physic:v:3:y:2021:i:6:id:11126

DOI: 10.24018/ejphysics.2021.3.6.126

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