some kinda Wave Theory |

We assume:
- As the stock price,
**P**(n),**increases**above some magic price,**P**_{0}, investors SELL (to lock in gains) and the**Slope**of the Price*vs*Time chart (namely**P**(n) -**P**(n-1))**decreases**at a rate proportional to**P**(n) -**P**_{0}. - As the stock price
**decreases**below some magic price,**P**_{0}, investors BUY (at bargain prices) and the**Slope**of the Price*vs*Time chart**increases**at a rate proportional to**P**(n) -**P**_{0}.
Fig.1 Price vs Time
The change in P(n+1) - P(n)
} -
{
P(n) - P(n-1)
}P(n) - P_{0}, hence:
where ω Rearranging terms, we get:
next stock price,
P(n+1), in terms of the previous prices
P(n-1) and P(n).
How to choose
ω^{2} ?
If we rewrite equation ^{d2}/_{dt2}
P(t)
= - ω^{2}
{
P(t) - P_{0},
}P_{0} is a constant, the solutions oscillate
about P_{0} (as sines and cosines ... stare at
the extrapolated part of Fig. 3, below)
with a period T related to
ω via
T = 2π/ω
hence ω = 2π/T
where T is some period (in days, perhaps), so we rewrite equation
(2) as:
T in some sanitary manner (like T = 10 days).
How to choose P_{0} ?
days, or
VMA(N), the Volume-weighted Moving Average
price over N days (see VMA).
Here's an example of what we'd get, using equation Fig.2 Predicting the Price P(n+1)
In this example, the direction of the changes in the
Also, the
How to choose P(n) ?
Should
How about extrapolating ?
If we stop using the Fig.3 Extrapolating the Price
where, in the extrapolated portion of the graph,
the chosen value of Fig.4 Predicting CBR
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