Application of String Theory in Forex Trading

Yet another econophysics e-book is presented to your attention today. Published in late 2012 by R. Pincak and M. Repasan from SORS Research, this research paper describes the first attempt to apply the physical and mathematical model of the string theory to reliably predict the currency rate fluctuations in foreign exchange market:

To do so, they first build a prediction model based on the string invariants (PMBSI), which turns out to be rather ineffective, especially so on time periods longer than one tick. Then, the authors improve the model by making it based on the deviations from the closed string/pattern form (PMBCS). The second model shows better results with a stable and high profit combined with low drawdown on a one-year test period.
I must warn you that even superficial understanding of this article requires a significant level of knowledge of the related scientific material. Be prepared to browse through 4-line formulas and such terms as Kullback–Leibler divergence. Moreover, the article contains a huge amount of grammatical errors, which sometimes render the whole sentences incomprehensible. Otherwise it is a great example of combining modern physical and automated Forex trading.

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