Market fluctuations- The thermodynamics approach

A thermodynamic analogy in economics is older than the idea of von Neumann to look for market entropy in liquidity, advice that was not taken in any thermodynamic analogy presented so far in the literature. In this paper, we go further and use a standard approach in market fluctuation and develop a set of equations which are a simple model for market fluctuation in a hypothetical financial market. In the past decade or so, physicists have begun to do academic research in economics. Perhaps people are now actively involved in an emerging field often called Econophysics. The scope of this paper is to present a phenomenological analysis for Market Fluctuations through Thermodynamics approach The main ambition of this study is fourfold: 1) First we begin our description with how market parameters vary with time by using of simplest example. 2) To extend that the market fluctuations appears with the enforced changes of macro parameters of the market and land speculations with non existence. 3) Next we derived the equation for how market fluctuates with respect to time in an equilibrium state. 4) Finally we analyze the how the fluctuations affects the perceptions of the market agents on the future. And this paper end with conclusion.