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# Volume required for a reversal for a stock

Discussion in 'Technical Analysis' started by stock_trad3r, Jun 17, 2008.

1. ### stock_trad3r

The volume required for a stock to fall a certain percentage on a 1x1 scaled graph is approximated by the formula:

V2=V1*((M2-1)/(M1-1))*(M1-1-2ln(3/(M1+2)))/(M2-1-2ln(3/(M2+2)))

V1 is the volume on the left side of the chart

M1 is the slope of the left side

M2 is the slope of the right side of the selloff

V2= is the volume required for the selloff

the formula is derived by taking the integral of the energy level

the energy level is a function of price, slope, and volume for a time interval and the energy of the left hand side must equal that of the right.

This formula explains why a stock like CSCO or INTC doesn't fall more than a penny when someone instantly sells 1000 shares

2. ### circadian

could you elaborate on the "volume on the left side of the chart"? maybe do an example problem with this formula so I can see the variables put in the right places. that would be awesome if you could make that happen.

3. ### kidPWRtrader

What are you talking about?

First you're a fundamental investing guru, then a daytrading guru, and now I don't even know...

4. ### Skog

Hmm. Or could it just be that these stocks are highly liquid?

Keep doing what you do... Whatever it is...

5. ### stock_trad3r

nearly every observable volume price relationship can be explained through manipulation of the formula

this is the closest to a 'formula' for the stock market

A high volume, high density, selloff on the right hand side of the chart will penetrate a weak left hand side support even if the volume on the right hand side is much less than the total volume on the left hand side.

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