Chaos Theory in Finance

Abstract

The theory of chaos is well suited for the understanding of the financial perspectives, because the behavior of the financial market is predetermined whole number of circumstances that are relative to the market can be caused by both internal and external reasons. The theory of chaos for decades was one of the most acute topics in science, but so far it has not been sufficiently used in financial theory and practice. In the course of growing instability and increasing the role of randomness in financial markets, attention to this theory is growing. In this connection, it is important to determine the possibilities and limits of its application in finance, as well as its relation to traditional economic theories. The article attempts to clarify some points related to the possibility of using chaos theory in finance. In particular mechanism of its application to the macro and micro processes, as well as the use of certain methods and instruments such fractal and stochastic processes, prediction.

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