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Classical theories tell, the world can be explained by a linear model, with certain variables, the future is predictable, as the apple must fall to the ground; If the prediction is not correct, there must be some minor noise issues. The real world tells the different story. Uncertainty and nonlinear system are everywhere in the world, linear systems happened under control environments. Nonlinear systems become the real world. Recently, the most famous nonlinear dynamics system theory is Chaos, almost every academics theory is trying to use Chaos System into its domain, breaking the wall of different academics.
There’re many studies about stock price trend analysis. Recently, Chaos Theory is often discussed. Some characteristics are necessary to define a chaos system: open, non-linear and un-balanced. These characteristics can be found on the stock market. Although conclusion has not been given yet, however, we might be able to point out that, the stock market can be treated as a chaos system, and the Wave Principle, which announced by Nalph Nelson Eilliott in 1938, is the finding. The Wave Principle concludes several price trend types of the financial market, which repeated again and again on the market, it is the most complete price trend types study.
The most difficult part of Chaos System is, no well-defined system to determinate a system is a Chaos System or not, so bottlenecks happened. This study tries to use a systematic method, which might be useful to identify the Chaos System, and discusses the chaos phenomenon of the time series of a stock price trend.
In the end, this study proves that, the stock price time series of China Steel Corp. is a low dimension Chaos System
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