Predicting Stock Price Mathematically
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/ garguniversity There are two prices that are critical for any investor to know: the current price of the investment he or she owns, or plans to own, and its future selling price. Despite this, investors are constantly reviewing past pricing history and using it to influence their future investment decisions. Some investors won't buy a stock or index that has risen too sharply, because they assume that it's due for a correction, while other investors avoid a falling stock, because they fear that it will continue to deteriorate. www.gargunivers... Check out Ebook "Mind Math" from Dr. Garg
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I use the "sit and watch the price until I figure out the trend, then buy at the low and sell when it does what I know it's going to do" technique.
very important to understand you have to continuously do this for multiple time sets. daily 5 min, 10 day 10 min 30 day 60 min 3 month daily 6 month daily 1 year daily and 5 year weekly. Figure out each respective probabilty and then use comparative analysis and prob dist to figure out your daily prediction trends. Then compare your trends with hthe Moving Average Convergence Divergence (MACD indicator) on each of the same chart sequences as above. Then cross 4 EMA with each chart. if the chart patterns are consistent you no longer have randomly distributed data, rather a glorified gambling set that dramatically increases both your odds and gains.
As soon as you said you have to calculate MACD, you are a technical fool, complete nonsense, if you understand Occams razor and that stock prices are essentially a fractal, you would not waste time trying to fool yourself this crude technique is about as good as it gets.
you have no idea, the maths is not even right, you need to learn some basic statistics, what you are talking about is econophysics and you cant see this guy cant do simple quant maths 101.
what utter nonsense & garbage
I want the same stuff you guys are smoking
Its a good education video... It has its limitations, but i dont see the people who are commenting the negative comments come up with a better way to do it.
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i used his technique on a stock i'm familiar with and it proved accurate despite naysayers in the comment section.
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This is a very dangerous video clip from the comments below people with limited knowledge believe that these relative cumulative frequencies are probabilities, there not, and that probability estimates are predictions, they are not they are likelihoods, not predictions. what your graph is is a cumulative frequency ogive, not a probability distribution, and you are not calculating probabilities but relative cumulative frequencies, then subtracting them from each other this is not probability. I will post a reply to this on youtube in the upcoming weeks explaining basic quantitative finance 101, you also calculate your returns incorrect the percentage change is the estimate of daily returns.
haha lol
Firstly, you must learn how to "write English"...!!!
HAHAH “upcoming weeks”!
@@FenderAddict93 there was a reply 4 years ago czcams.com/video/Pwv_T_BeWuM/video.html
hi, in the end you just told us, the probability of a stock moving above or below is the same. So which means we basically cannot predict how it moves ? Right ? Effective market hypothesis right ?
yes, this is also what i think
If a security's movement cannot be predicted, the possibility of a failure in scenario is 50%. Which is equal to the possibility of a success. So in simple words no one can effectively predict the market.
Vishnu Narayanan i think because the method he uses is normal distribution. Actually the market moves in chaos and random (not normally distributed)
a 100 points drop in nifty the day before. How would you see this? Fundamentally or technically ?
very important to understand you have to continuously do this for multiple time sets. daily 5 min, 10 day 10 min 30 day 60 min 3 month daily 6 month daily 1 year daily and 5 year weekly. Figure out each respective probabilty and then use comparative analysis and prob dist to figure out your daily prediction trends. Then compare your trends with hthe Moving Average Convergence Divergence (MACD indicator) on each of the same chart sequences as above. Then cross 4 EMA with each chart. if the chart patterns are consistent you no longer have randomly distributed data, rather a glorified gambling set that dramatically increases both your odds and gains.
Bro , hats off to you , you explained so much maths that most of us don't understand motive of calculation
It is basic algebra.
Fundamental Flaw in the approach - So basically if you select the highest percentage change (max positive % change) then you get very high probability almost close to 1, which means you have high chance that stock will show huge increase ? Do you think that make sense ?
Yes Nitin, It is the cumulative probability. For example, if you look at the 2% gain it will give you what is the probability for the gains to be less than 2%. To get probability of gains between 1.5 and 2.0 percent you would have to take a difference in probability to two points. If you go to very high gains (suppose 50%) commutative probability will converge to 1. Convergence to 1 means here are 100% chances that stock gains will be less than this 50%.
Yes you are right it is not a probability at all, it is a relative cumulative frequency and it is a dangerous video, misleading people.
graph reading is much easier way to identify price rejection/bounce and direction...
if the graph was right you are right but the graph is wrong watch my follow up reply video
Trading has nothing to do with probabilities. It's all about order flow. Hint: I don't use moving averages much anymore ( you eventually move past the need for em ), but if price has been moving down without closing above a moving average then closes above the average at a point, something has changed in the order flow.
good luck champion read Nassim Nicholas Taleb fooled by randomness.
Trading has nothing to do with probabilities?? 😂😂😂
At 1:53, don't you have to divide it by the previous price, 733.76? You said it right but divided by 731.25 instead.
Yes, the % changes are nonsensical. You can tell by just looking at them
That confused me first time in this video and after that i lost the track and more he's completely fuckin with my mind 😂😂😂😂
i also noticed.
anyway isn't it should be previous price. commonsense says so.
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you are calculating the volatility instead of direction
May not but not exactly
If thats the volatility my arse is on fire, I don't see any flames and I haven't been lighting farts, go back to school.
This is not the volatilty the volatility is the standard deviation.
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he doesn't say direction.
Isnt it like this?
Change in percentage= (b3-b2)*100/b2
Eg. ∆P=(1100-1000)*100/1000
=10%
arithmetic returns are not quantitatively correct, you use log price changes ln(price2/price1) to get the percentage daily return see czcams.com/video/Pwv_T_BeWuM/video.html
It is the probability of the particular series and can not be used for live market or for trading. The Vdo can be considered as an Excel tutorial and not for stock price prediction.
I always read comments first before watching the videos.Hence,l am leaving.Bye.
Video: Predicting stock prices of Google
Uses Yahoo for the analysis
Really nice video. What would be interesting is to see is if these probabilities remain more or less constant for a company/asset over consequent years and thus consistent for the purpose of projections
I am a quant and I do this everyday mostly with R, and they dont stay constant and his calculations are all wrong, be carefull!
@@nhoj277 please im trying tp learn more about this can you point me some videos abut correctly calculating this?
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But where is the rightness proof?
Can you justify your prediction/probability for a value that you have got the very next day.
This is a good Excel tutorial, if you ignore the fact that it’s not going to help you predict anything with a bette chance than random
What is the probability of success of this probability working. The assumptions themselves are probable. Market is very dynamic. The emotions, sentiments, psychology, liquidity, micro and macro economic parameters etc., are the factors for price movements. Mathematics require certain amount of facts and discipline. So many statistical measures and probabilities are built into Technical Analysis - even then - none can assure the indicators and oscillators working up to 100% accuracy. The Research says that only 2 to 3% of the Traders make money in Intra-day and Swing-Trading.
You do not need 100% accuracy. You can win if you can be more than 50% accurate. Even with 51% accuracy. Also, no one without proper education and tools should invest in markets. The whole purpose of stock market is to transfer wealth from common people to professionals in this business.
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This is a fantastic video and explanation... thanks!
I learnt a new function(small) in excel from this video.. Apart from it every thing else is real crap..
If you can't say something nice, just don't say it. Who made your the arbiter of crap? Jesus, just be nice. If you don't like it bc it does not apply to you, just move on.
Stephen Hobbs Dude, we need to call out crap on things that deserves to be called it. The video is a huge mistake, it’s literally saying that a green day in 2010 will somehow affect the future stock price. He’s literally calculating the chances of the stock hitting a specific price from some arbitrary number of how much items there are.
What is the time frame for your probability analysis? Like at 9:00 where you talk about the probability of the stock staying under 2% and above -5%...in what time period will that probability prove effective?
One day because we are looking at one day changes.
@@laramie123 Thank you for the reply.
I think volume also consider. and other thing is need to find mean and standard deviation. Then need to find the probability through stanaderd normal distribution.
Volume is considered for other analysis. This had nothing to do with volume.
This is equivalent to predicting the future... Does it do better than random ?
it is not and it does not work wake up.
I may not have PhD in Statistics but I can easily tell this way of assigning probabilities using frequencies is a very poor way to judge the probability of stock movement for a given time frame. This method is no different from the coin toss experiment and thus the latter gives you more or less the same results.
May want to get a PhD or read some research papers
@@laramie123 you should! he is right, I have a masters in econometrics from a group 1 University not calcuta remedial college your stuff sucks badly.
Your asking the probability of an event happening, or price range, BUT for what time frame? this does not address the time period. You’re looking up about 400 days or so of the stock’s historical prices, so does this probability answers is the answer for daily price fluctuation or for a longer time frame?
it is not a probability this is the probability formula =normdist(ln(price/threshold price)/(volatility*sqrt(no of days for threshold/year in days))) his price does not prepare for extremes it is range bound by a 400 day sample which may in fact be atypical of the stocks true price history. it is a badly done relative frequency polygon known as a frequency ogive.
read all CPY the reports and company future planning it will give clear cut ideas..
Fundamental analysis like technical analysis is only marginally useful, most people make money by simply buying and holding and the general upward drift in prices over time accrues gains, simple, otherwise , and I am not joking, you need to understand rocket science, Brownian motion, statistics, calculus, basically quantitative methods.
how to download this excel sheet
So with this graph and numbers when do I start buying and selling when proba8is low or high ?
It is possible to the same thing in Libreoffice Calc? I'm not using MS products.
Great video! Helped me a lot.
+markus lervik Thanks!
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I belive you can use percentile and percentile rank to figure some of this aswell
you are confused
what is your opinion about technical analysis using smc concepts or fundamental analysis and use this method, do you think that if you use maths and TA you have more % to win?
quantitative finance yes TA no better than random.
Looks like a really fun excel exercise, but any real trader will tell you there are way more variables in a stock's movement than it's past price performance. A single news release can throw the whole thing into undeserved selling or unwarranted buying. In the end it is always speculation, not concrete math that accurately predicts the stock price. If it was only math, then anyone who traded would be a millionaire in less than a year. Which obviously isn't the case. Good video though, very interesting.
You are Correct!
Can't predict market sentiment..
If it was this easy Warren Buffet would own the whole Stock Exchange and every listed company in the Nasdaq and Dow Jones Lol
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Look at all the prices from Count 1 to Count 6, it is decreasing from one day to the next but in Column C his calculation is showing a positive percentage change. Is this logical?
No excel File to download?? (cry)
What is small functions?
Excellent Sir
Super informative...
Can you do an episode of an analysis of Petroski (Score 9) stocks...There seems to be information that these petroski 9 stocks outperform the sensex by 100% over time...
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How to extrapolate this method of stock market
How can we predict the market using math? I believe it's possible through Fourier series and a few other views. Please help 🆘 I just don't understand how to get the wave form of the market and then calculate a point in time to predict the price. Itself sounds simple but idk what to
forget it fourier series do not predict prices
CAN WE USE THIS FOR INTRADAY
YOu dont understand probability, NO its not for intraday. ok.
If you had any brains you would learn proper probabilities, this is incorrect.
Yes it does help... thanks for sharing
Haha.. simplicity at its best but let me try to extrapolate your study. Do this same thing for one month rolling change instead of daily and taking longer history. Then if prob of moving between -2 and +2 is say 65% then write a call and a put with one month expiry and strike in that range from cmp, which would suggest your winning rate is 65%.
Can u share this excelsheet
i couldn't understand this prediction and calculations.. how to use this can you please explain this calculation,, it helps a lot.
This is as simple as you can get you will have to learn simple mathematics of finance 101.
How can you predict government policies and etc.. and people demand and interest generally
All changes in government policies etc also happened in past and they are built into the data. This method provide us what all can happen and probability. Not what will happen.
With machine learning or regression not this nonsense numbskull.
Great video. Thank you Sir. Where can i download your spreadsheet ?
This is good, but then again markets can act irrationally and break high/low barriers
Yes. Do not invest in it if you do not have proper education and did mock trading for a year.
great video. how effective is the probability ratio in forecasting index trend ?
it is not a probability ratio but frequency ratio incorrectly done. as you have no doubt found it is no use at all.
Hi Very interesting, explained well. This helps probability of stock going up or down based on pasted history. So yes good stocks have equal probability of going either way.
What mathematical formula is used using time/dates and price during a period to determine that the price is mathematically low in a period of time.?
There's the Black Scholes for an enquity option. But it's worth looking at Random Walks (function of time and other factors)
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How we know sensex closing
Where is predication
hi dude, good explanation but we don't know whether it decreases or increases today/tomorrow, please provide that details if any.
Probability to increase or decrease is same :)
it is impossible no single person on the planet can do that except having a guess.
i just buy when its price down 30% and sell while up 30% ,could you give me advice ?
Its a bit more complex than that, and it never went above or below 30% in a day, I am pretty sure the S&P only ever dropped in a day 20% black monday 1987, it never drops more than 10% generally in a crash in a day, you mean in a month it might drop 30% or rise 30% this is about daily probabilities.
Bhai probability pdha h kbi, 16% ki probability 1 means daily 16% increase hoga. Mtlb kuch b.
It is cumulative probability. Probability for stock price increase to remain under 16% increase approching 1.
full confused,,,,,no logic,,,pls explain wht is % changes sort,,,and the way u calculate for % change is ryt ? i think the equation is for % change =(B3-B2)*100/B3........pls let me know if it is wrong and why ,
there are two ways to calculate %change, yours is from back to front , the author is from front to back., both are correct, depend on how you look at the %change., well, asking your math teacher might be more accurately..just like a pork, some people presume it's unholy food, others don't look at that way., which one you can presume who's more correct than other ?
All the data is weighted equally, unfortunately this is not how the stock market works.
How do you think they should be weighted?
@@laramie123 easy. Law of large numbers!
That's such a bullshit. These probabilities have no actual causality with individual pricing. Why do you sort by change and tie it with count column ? If you want to find changes, use conditional probabilities
That is what we call cumulative distribution. Sorting is required to find out cumulative distribution. Please refer to research papers on obstructed diffusion from Christopher Naumann.
great!! is there any samples?
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you started confusing while telling probability less than a particular value, ideally, it should be a sequence of events, not an individual event
Nice, thank you.
Do you have any of your spreadsheets for download?
That's what I was thinkin. I'm good on computers but all that spreadsheet stuff holy moly!
One video that made me understand at least something about how they calculate stock price..
i work in a trading company i want to download the video please help regarding downloading
Bro there is a downloading button 4th from the left...once downloaded it will show as downloaded. Also you can try using youtube downloader.
THIS IS A GOOD VEDIO .... IT HELPS ME A LOT..... BCZ THIS STRTEGY ALSO BE IN MY MIND....BUT I CONT DO IT BECOZ I DONT KONW HOW CAN DEVELOP THIS
what time horizon is this for?
One day.
That's one way to calculate probability. Another way is to use NORMDIST function in Excel (czcams.com/video/bWh7Av_PavY/video.html) or the monte carlo simulation (czcams.com/video/wKdmEXCvo9s/video.html)
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I think you forgot to normalize the data, before determining probability.
No normalization is needed.
Your probabilities are all wrong. Find the mean, do standard deviation. How can you have 100% probability that the stock will go up 16%? 0% probability that the stock will go down 5%?
No, no, no. You did probabilities all wrong. Your count does not equivocate to frequency of that net change from a simple sort of range of minimum to maximum. That’s why you’re getting messy errors towards the bottom: no stock would rise 16%, 15%, etc. 98%, 99%, etc. You need to calculate the standard deviation of the stock price over a set of time to understand the volatility of the stock’s price movement, and then do regression analysis with certain degrees of freedom to forecast the stock’s price with a selected confidence level.
This is called cumulative probability. You are talking about another concept.
Stocks prices are log-normally distributed so be careful about using standard deviation on prices. In fact you can not even standardize deviations on a non-gaussian asymmetrical distributions as their central tendencies are poorly defined unlike in a gaussian curve. Regression will only make things worse.
For satan sake people, have basic education on when not to use standard deviations and regression.
I like it, but a bit convoluted.
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Good job thanks
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what a waste of time... we can find this out by just looking at a simple candlestick chart with sma
Keep your mind open :)
thats just excess noises, filter system on..
chandlestick chart and sma, so you reckon probability is the same as reading tea leave charts? Delusional.
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Market is
what was the point ? .. how did you predict the stock price here ? .. do you even understand the meaning of the English words, which titles this video ? .. what a waste of time
Hi, Great video!! But unless I'm mistaken, there is a contradiction betwwen the calculated results and the graph. According to the graph, the probability of a price move between 1 & 2% is close to 70%. The calculated result gives a probability of 28.676%. Would substracting that number from 1 give us a result which matches the graph?
yes
it is not a probability and is range bound by the sample size very dangerous
Horse racing would be a better probability to perform better. Would rather suggest don't display such crap
moreover the title is absolutely misnomer
Absolutely right, it is wrong.
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I believed its gonna be an intresting video, but u end up in one desert, feeling lost
Jeeeesus!
So do u have better way? Don't just talk mr smart ass
thank you so much!
b lil bit louder
thoda jorse bolo
Thanks. Looks like I will have a 50% chance of it going up or down.
Yes. That is why be careful.
what a foolish method is this. no logic here. simple example if the prob is 50% for stock to moove from 0-15 % then definitely the chances of moving stock between 0-1% should be much more then 50% but here it shows 28%.... whatever is shown in xls sheet is all wrong and not at all logical.
just tell me which one is the larger range between the two
1)0-1
2)0-15
it is obvious that 0-1 lies within 0-15 so how on earth the probability of getting 0-1 be higher than getting 0-15.
and also had he taken the whole range i.e. -5.35-16.03 it would have resulted in 100% probability.
probablity will not give a ture answers but it will predict in terms of percentage higher the percentage higher will be u r assumption come true in engineering applications.
Probability is defined as chance, more chances are there for the stock price to be in 0-15% rather than 0-1%
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