LOL, I was wondering when those posts were going to get taken down. After all, as I've seen even the mods post b4. Why wouldn't you cough up the cash to advertise if you were a successful trader / investor? No doubt som1 is getting a PM warning as I type.
You might be missing the point. It's an important part of the risk/reward ratio. It normalizes asset returns to make them comparable. It is Volatility that gives the market it's importance. It's an energy field created by all living things. It surrounds us and penetrates us. It binds the galaxy together.
Thanks guy for the links, but do you really need to measure volatility? or a basic knowledge of trend direction is all you need? please educate me.
It's actually very interesting. I always thought that you can't forecast volatility. Thanks for sharing.
GARCH implemented in Excel. http://investexcel.net/garch-excel/ Thanks to everyone for sharing their thoughts.
Euan Sinclair suggests to keep things simple: http://blog.factorwave.com/volatility-forecasting-for-traders
Trying to understand this made my head spin, so can some of you help me out? I want to start with two fundamental questions: 1. First up is the stochastic process. It is assumed that stock prices are random, and therefor follow a stochastic process, i.e., the next variable is random and one cannot predict what it is, only the probability of what it is can be determined. First question is how random is stock price? 2. Is volatility also stochastic, i.e., random? If it is not, then perhaps it can be forecasted. If it is, then forecasting will not be very accurate. I still cannot make sense of ARCH and GARCH, but I think they are based on the assumption that volatility is not random (clusters around in between quiet periods) so can be modeled. Second question for you folks is: Is it random (around a mean for example) or not? Once I understand the randomness of both, I will try to make sense of ARCH..... Maybe I got it all wrong but thanks I appreciate the discussions.