Financion: A quantum approach to financial market modelling

Abstract

In this paper we will show that, in the financial market, the concept of chaos is removed and replaced with that of complexity. Indeed, it has always shown the characteristics of a dynamical system with high complexity. In particular, we present a new theory to describe the financial phenomenologies: a theory that is able to combine the different founding aspects of the financial market. This study provides a useful answer to the fundamental aspects of the market: its multiscale or multi resolution properties; its quantum-relativistic properties; the usefulness of describing, at a fundamental level, the interactions between bullish o + and bearish o – financial operators; the usefulness of declining financial interactions between operators in terms of scattering, annihilation or creation of elementary liquidity constituents; the introduction of a specific field, named financial field, and its gauge boson, the so-called “financion” as a mediator of financial interactions; the possibility of describing the financial market as a dynamical system, capable of absorbing financions and that is quanta of interaction liquidity. Thanks to this new paradigm, we have been able to describe and define the market scale length, i.e. revenue, price, risk (λ, ρ, σ). Furthermore, we have analyzed Kahneman and Tversky’s Prospect Theory to describe the decision-making process under risk conditions, not considering the price as a function of time, p = p(t), but by carrying out the analysis of price dynamics as trajectories in the transformed energy-entropy space ES of the financial market , where there are more stable and reliable indications than common indicators.