Chaos Theory in the Financial Markets [Hardcover]

Dimitris N. Chorafas (Author)

Book Description

Publication Date: March 1, 1994

Chaos theory is a revolutionary approach to understanding and forecasting the behavior of complex systems. The theory, which utilizes nonlinear mathematics to identify the underlying rules of evolving systems, provides extraordinary insights into the dynamics of the financial markets. In so doing, Dr. Chorafas explores a variety of new approaches that provide an entirely new perspective on financial market analysis and forecasting. Topics include: the concepts and mathematics of chaos theory; using nonlinear equations and fractals to forecast the currency market; genetic algorithms and neural networks.

Editorial Reviews

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Product Details

• Hardcover: 400 pages
• Publisher: McGraw-Hill; 1 edition (March 1, 1994)
• Language: English
• ISBN-10: 1557385556
• ISBN-13: 978-1557385550
• Product Dimensions: 9.2 x 6.3 x 1.3 inches
• Shipping Weight: 1.8 pounds (View shipping rates and policies)
• Average Customer Review: 2.0 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #1,007,640 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

26 of 26 people found the following review helpful:

3.0 out of 5 stars Good with the broad brush, weak on the details, November 3, 1997

By 

Nathan Meyers (Medford, MA United States) - See all my reviews
(REAL NAME)   

This review is from: Chaos Theory in the Financial Markets (Hardcover)

This is the book to read if you want to sound like an expert on modern, non-traditional methods of financial analysis. By the time you've finished this 371-page volume, you'll know all the buzzwords, the names of the important researchers and research centers, and even the names of early Greeks (Democritos and Pythagoras, for example) who laid some of the groundwork for Chaos Theory.

As the broad historical sweep suggests, this is a book that paints in very broad strokes -- covering not only a wide range of research areas (chaos, complexity, artificial intelligence, computer simulation), but also a dizzying range of disciplines (physics, biology, chemistry, computer science, mathematics, economics) and historical perspective.

What this book does not do, unfortunately, is teach you how to practice any of this stuff. In its quest to present a conceptual picture, it glosses over the science and engineering in ways that border on heresy. Consider this novel explanation of Einstein's special and general theories of relativity:

"If Newton's laws of motion put an end to the idea of absolute position in space, Einstein's theory of relativity gets rid of absolute time. What Albert Einstein established is that

" - There is no unique absolute time.

" - Instead, each person has her or his own personal measure of time.

"This measure of time depends on where that person is and how he or she is moving. With these two contributions, space and time have become dynamic entities. When a body moves or a force acts, it affects the curvature of space and time. Something similar can be stated about behavior in the financial markets."

This is neither science nor economics; it's conceptual handwaving (although I cannot resist the image of traders careening around the exchange floor at velocities approaching the speed of light :-). If you speak this sort of language, you'll like the book. If, on the other hand, you're a technical reader who wants to learn how to practice -- consider the other book I purchased at the same time: Robert Trippi's "Chaos & Nonlinear Dynamics in the Financial Markets" -- a combination of introductory articles and real papers by real researchers, and much better on the technical details.

21 of 21 people found the following review helpful:

1.0 out of 5 stars Don't waste your time., April 30, 2000

By 

"rrralph" - See all my reviews

This review is from: Chaos Theory in the Financial Markets (Hardcover)

A much better title for this book would have been "Interesting Financial Concepts That Hopefully Some Other Book Will Teach You"

As an engineer, I saw this as a very shallow treatment of Chaos Theory that will do NOTHING for those who actually wish to apply it to financial markets. Chapter after chapter poses questions to the reader but fails do deliver the answers. One can only assume that the few diagrams and examples presented are not explained because the author just does not fully understand them.

The reviewer who claims that the book was a good starting point may have been partially right. It asks so many questions that now I must find a text with at least one or two answers.

17 of 17 people found the following review helpful:

1.0 out of 5 stars worthless, overpriced, April 3, 2000

By A Customer

This review is from: Chaos Theory in the Financial Markets (Hardcover)

Although math is mentioned in the desciption, you won't find any in this book. This book is written for junior high school economics students who have never heard the terms chaos or fuzzy logic before. With a background in non-linear dynamics, I found this text insulting for its price. Application of the current trendy concepts to any market whatsoever was completely lacking. It is essentially a 300+ page version of Webster's dictionary definition of chaos. For the amount of information present in this book, it should be priced in the five to ten dollar range.