A Heisenberg Uncertainty Principle-Based Volatility Approach for WTI Price Dynamics

Mustafa Hakan Saldi

Fiscaoeconomia, 2025, issue 4

Abstract: This study is designed to fill the gap between classical financial models and modern market requirements by applying quantum mechanics principles to the WTI (West Texas Intermediate) crude oil price dynamics. Specifically, the Heisenberg Uncertainty Principle is explored with both a conceptual framework and an applicative real-time scenario to measure and model the volatility of WTI (West Texas Intermediate) crude oil prices. In this context, a novel volatility indicator, which is derived from a quantum mechanics-inspired methodology, centered on the Heisenberg formulation, is proposed. Therefore, the relationship between price position (Δx) and momentum (Δp) is analyzed to demonstrate how this principle, which is formulated as Î”ð ‘¥â‹…Î”ð ‘ â‰¥â„Ž/4𠜋 can be adapted to capture the uncertainty and fluctuations of WTI price actions. The recommended volatility indicator offers a unique approach for inquiring price behavior, incorporating both quantum mechanics principles and financial market dynamics. This approach not only enhances predictive accuracy but also provides a deeper insight into market patterns by addressing the chaotic and interconnected nature of modern financial systems. Furthermore, the findings pave the way for developing more advanced trading and risk management strategies tailored to volatile energy markets like WTI.

Keywords: Quantum Mechanics; Heisenberg Uncertainty Principle; Financial Markets Volatility Indicator; WTI Price Dynamics; Price Action Analysis (search for similar items in EconPapers)
JEL-codes: C58 G10 G17 M10 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:250420

DOI: 10.25295/fsecon.1694385

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