Random Charts

Discussion in 'Strategy Building' started by ctrader, Nov 12, 2002.

  1. BKuerbs

    BKuerbs

    It should not bother you. First, the suggestion with this representation is: you see a "Chart" generated by a brownian motion, so every chart is generated by brownian motion. That's flawed thinking: a horse has four legs, is everything with four legs a horse?

    A mathematical note: If A implies B, then it is not necessarily true that B implies A.

    Practical note: are these charts really the same as charts taken from the stock-market? They are, by their very construction, immune to external events. External events may be, earnings warning, dividend payments etc. A Stock reacts to that (even if it does not, that's the bases for some investment strategies).

    The market does not consist of a single stock, there are thousands. What if each and every one only obeyed to the brownian motion? Then their moves would all be independent from each other. That's clearly not the case. Stocks move in sectors and along with the market. When automobiles rise, they usually rise all (again their always are some exceptions). And when the market rises or drops, it is like the flood rising (or falling): all ships will rise along with it.

    All in all the representation is a nice gimmick, not more.

    Regards

    Bernd Kuerbs
     
    #11     Nov 13, 2002

  2. I have never seen a stock chart that looks this ugly.....
    Too many up and down vertical lines...
     
    #12     Nov 13, 2002
  3. Yeah the premiums on those options must be murder.
     
    #13     Nov 13, 2002