What it does
The Probability Projection tool draws a parabola that, according to the study, will encompass probable future chart values
The study is based on the work of Fisher Black and Myron Scholes. It uses probabilities (volatilities) to project current prices into the future, and assumes that prices are normally distributed and arrived at randomly.
How to use it
1. Right-click the chart, point to Pointer Tools, then click Probability Projection.
2. Click the chart to establish the beginning point for the volatility calculation.
3. Click the chart to select the ending point for the volatility calculation.
4. Click a third point to mark the left-most point of the Probability Projection curve.
Probability Projection parameters
|
Parameter |
Description |
|
Type |
Method used for calculating the volatility. Choices include: Percent, Log and HiLo Range. |
|
Value |
Value used for the calculation. Choices include: Open, High, Low, Close. |
|
Prob% |
Probability the price will lie within the parabola. Choices are 90 or 95 percent. |
|
Date |
Represents the clicked points. Pnts 1 & 2 represent the beginning and end of the range for the volatility calculation respectively. Pnt 3 represents the anchoring point for the parabola. |
|
Time |
Represents the clicked points for intraday charts. Pnts 1 & 2 represent the beginning and end of the range for the volatility calculation respectively. Pnt 3 represents the anchoring point for the parabola. |
|
Display |
Opens sub-window with Color, Display, and Weight parameters. Color = Select colors for bars. Weight = Select thickness of bar. Display = Select the check box to show the line on the chart. |
|
Id |
Turns on and off the labels. |
|
IdWt |
Select normal or bold for thickness of ID. |
|
ScaleLabel |
When selected, the display highlights the initial set point on the time axis. |