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Heisenberg Uncertainty Principle in Forex

February 4, 2013 by

Following a recent addition of a rather complex mathematical scientific paper concerning Forex trading, today, I introduce an article originating in physics or, more precisely, in econophysics.

Soloviev V. from Cherkasy National University and Saptsin V. from Kremenchug National University are trying to carry the philosophy of general relativity and non-relativistic quantum mechanics to the analysis of economy. The presented e-book is called Heisenberg Uncertainty Principle and Economic Analogues of Basic Physical Quantities. It is rather short (21 pages) and about a half of it is filled with the figures depicting the experimental results.

First, they introduce some of the basic physical notions and explain the philosophy behind them. Then they discuss how these notions and concepts can be transferred to the field of economics. They draw analogies from the concept of mass, speed, energy and Planck constant. In the experimental part, they analyze three different groups, each of them consisting of three time series: gold, silver and oil for commodities; USD/JPY, GBP/USD and USD/CHF for currencies; S&P500, FTSE100 and BVSP for stocks. Daily values of the period from April 27, 1993 to March 31, 2010 are used. The authors calculate “economic mass” of the time series, “economic temperature” and “economic Planck constant”. Interestingly, their economic mass seems to be higher for the less volatile time series and lower for the more volatile ones. Their temperature parameter rises high during crises and stays low during normal times.

There are three main disadvantages to this article:

  • The analogies drawn are quite far-fetched, while the experimental results do not add much clarity to the time series’ analysis.
  • It is written in a rather bad English, which makes an already difficult material even harder to comprehend.
  • While Forex traders with some background in physics will probably enjoy it, others will have to learn a lot of new terms. I, personally, had to reread some parts several times and also refer to Wikipedia frequently.

You can download this e-book for free:

If you have any questions, comments or suggestions regarding this e-book or about adding more free books to, please feel free to post them in the comments below.

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