Pressure
Victor Niederhoffer writes:
What can the physics of pressure tell us about markets. when a large accumulation of sel orders is directed at one point the force /area is great as it is in a triple top or double top or break thru the sogi/ what other elementary physical principles apply to markets.
Zubin Al Genubi writes:
I can venture to say the idea of Gravity does NOT work in markets. Looking at a chart one gets the illusion of height or that gravity might effect prices but it is an illusion and a dangerous misleading illusion.
Peter DeBaz writes:
I'm not a physicist, so I'm sure that any understanding I have of physics would make a pro scoff. Financial "momentum" could be an expression of newton's first law. VN's original idea could be a restatement of f=ma, newton's second. And finally, "value" trading could be a violation of the second law of thermodynamics, which is why, one could argue, that it never worked (lol).
Andrew Aiken writes:
Black-Scholes-Merton option pricing formula is a direct restatement of the heat (diffusion) equation:
ut − ∆u = f(x, t)
and later refinements such as Heston, which allows for pricing “jumps”, are extensions of this equation with additional conditions.
(I prefer to price options in a way that doesn’t underprice tail risk)