Open AccessReassessment of the Concept of Momentum in Econophysics
Author(s) -
Mário J. Pinheiro,
Mario Rodrigo Afonso Pinheiro
Publication year - 2021
Publication title -
european journal of applied physics
Language(s) - English
Resource type - Journals
ISSN - 2684-4451
DOI - 10.24018/ejphysics.2021.3.6.126
Subject(s) - econophysics , economics , stock market , momentum (technical analysis) , stock (firearms) , variable (mathematics) , entropy (arrow of time) , financial economics , neoclassical economics , econometrics , mathematics , physics , engineering , mechanical engineering , paleontology , horse , quantum mechanics , biology , mathematical analysis
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.