The Simple Difference between Chaos and Fractals and What This Means for Financial Markets

Did you know that there are critical differences between Chaos and Fractals, and that this difference is the key to properly characterizing financial markets?
Even other YouTube videos made by people with expertise on this subject usually mix these things up in their descriptions, and don't explain the differences between fractals and chaos, and what they capture about financial markets.
Inspired by the book Jurassic Park, in this video we will be digging further into chaos and fractal theory, and discussing what this means for financial markets.
Chaos theory is a mathematical theory which explains how some kinds of systems behave in deterministic but effectively unpredictable ways. On the other hand, Fractals do not come about from deterministic dynamical equations, and are as related to complexity theory and emergent behavior as they are to chaos.

Credits:
Snowflake photo - Egor Kamelev, sourced from Pexels
Coast photo - Oliver Sjöström, sourced from Pexels
Seismographic chart - sourced from the USGS.

[ariemulderij]

and how does all this help us in trading the markets?

[chocolatemodelsofficial]

Anyone who came up with the equations to describe the fractal patterns we see on stock charts, is working for funds like Medallion. These papers won't ever be a part of the public domain. LOL.

[Harx.h]

Hi! Watched a couple of your videos on Fractals and Finance and found them to be really informative. As a Commerce graduate with a majors in Finance, I stumbled upon Fractals while reading some research articles for my proposal. was wondering if you could guide me to some resources, references or even some journal articles that would provide some insight to a person who is relatively new in the field of physics and fractals, since I am really keen on writing a research article relating to Fractals and its relationship with Finance during my Ph.D journey. Hope you keep uploading. Cheers and thanks!

[Eta_Carinae__]

Do you know anything about Langevin dynamics - dynamical systems whose equations contain a random component, but still end up forming an attracting set? Do you see any utility in finance for these sorts of equations?

[taquitodetripa]

Thanks for this video. Looking forward for more of your videos on fractals and finance. BTW I highly appreciate the references provided.

[ericano]

what is a fractal market on a higher timeframe? if for example the market is in an uptrend direction, does it mean that on a lower timeframe such as 1-minute, or or in micro time frame still the that is the same in an uptrend direction as an overall direction as a whole that the lower timeframe submitted to an uptrend direction because on a higher time timeframe is it is bullish trend. is it correct?

[triplem]

So the market is a nonlinear intertemporal statistically self-similar stochastic PDE with 10000s of variables, half of which probably follow some alpha-stable distribution which isn't even analytically expressible! So much for get rich quick schemes

[martinmartin]

hey, video interesting as of now, but let me say: many fractals are self-similar, but in contrast to popular opinion self-similarity is not a defining characteristic of fractals. And having it in your name and talking about it quite extensively, I guess you should know that.

[Eta_Carinae__]

The connection between chaos and fractals is stronger than your characterisation; each chaotic system has a fractal as its phase space.

[zacharris]

Turbulence does fall out of the navier stokes equations, you just need arbitrarily fine resolution in your simulation.

[MrVirtuezzz]

Genuinely not trying to devalue your videos or pry too much but I was just wondering if you're a profitable trader? Not that you have to be as I find your videos to be thought provoking at the very least. I also enjoy your thought process. It's just that if you are I thought I could try to pick your mind even more haha

[Kenayi]

According to mandelbrot, fractal is the shape of randomness. For some, that may mean chaos