Effectiveness of Bollinger Band in Signaling Essay Example for Free

Effectiveness of Bollinger Band in Signaling Essay Financial markets are the most difficult markets to operate in when determining the price at which stocks (bonds and foreign exchange are trading). Since stocks trade for long duration of time, traders need to know the appropriate time to buy or sell their stocks. To do this, they must have perfect information on the trends in the market through the market indicators. These indicator are always not obvious and at times require technical devices to show exactly how the trend of a particular stock ha been moving for a period of time (Bollinger 56). A trader can calculate deviations of the prices of that particular that he/she intends to trade and observe it. Though this is one way of observing the indications of stocks in financial market, there have been other means of observing the trends which are easier to use. One of these is the Bollinger Band which was developed by John Bollinger in the early 1980s (www. investopedia. com ). Bollinger band is a technical indicator of a stock in the financial market which consists of a centerline/middle line and two bands that indicate the deviations of the stock’s performance in the market from their pre-determined true trading value (Bollinger 56). These two bands indicate whether the stock was over-trading or under-trading. The upper band indicates the extent at which the prices went above the true value while the lower band indicates the extent at which the prices went below the true value. Through such indications, traders know when to sell or when to buy and make profits. When the upper band is high above the middle band, it means that the prices are high above the true value and when it is below the prices are lowest below the true value. These bands only show indications and they are not actual buying or selling prices. When the band is high, it is said to be expanding such that traders would want to sell the stocks while the band is below the centerline it is said to be contracting and the traders would be willing to buy the stocks (Murphy 344). Bollinger bands technique is used along with other techniques (like the Profit Magic of Stock Transaction Timing and Dow Jones Industrial Average) to give the best results in stock trading. This technique is very effective in that accurate trends can be observed since the bands adapt dynamism as the prices go up or down. The stock price is said to oscillate between the two bands (Murphy 348). They can also be customized to meet each traders needs. Bollinger bands can be set in a way that they only show what each trader needs in the market and hence the kit focuses on a wide range of investor in the financial market ( http://biz. yahoo. com ). They also show whether the prices are high or low and hence indicating the range of how the price had moved in the market. This enables investors to know when to lay off some of their stocks and when to acquire more. Mostly they would acquire more when the prices are below the centerline and shed-off or sell more when the band is above the centerline. And when the price is very much close to the centerline meaning that the prices have not deviated from the true price of that particular stock, no action should be taken (Bollinger 92). Bollinger bands are also consistent since they use the moving average which is used in calculating standard deviation. Thus they give reliable information and at times investors need not require other technical analysis in making their sell and buy decisions (The Quarterly Journal). The Bollinger band also captures much data and hence at a glance one can tell the trend of the stock much faster. Below are examples of analysis of international stocks to show how effective the Bollinger bands are: Intel Corp analysis for 2006: Intel’s lower Bollinger band closed below the centerline on Dec. 22, 2006 and this was a signal for over selling of the companies stock. (www. investopedia. com ). New York Stock Exchange: On June 12, 2006 the stocks broke the lower Bollinger band indicating that there was over selling. Through these signal technical traders would place orders to buy. The Bollinger band showed the extreme end of its lower band the following day putting much pressure for investors to sell. Yahoo! : On Dec 20th, 2006, Yahoo Company’s stock lowered the band which called for more buying. (Lifted from StockCharts. com) The chart shows that there was selling pressure on the stock and it turned out that most people were selling their stocks whereas the strategy was that of buying. Though Bollinger band analysis in the stock market has advantages, there are situations when this method does not give the expected results and it turns out that the market is operating in the opposite direction. Even if this is the case, the bands still oscillate and the trends will continue to show but the prices do not change quickly and thus the effects are not that severe. Over time, since stocks trade for long periods of time the strategy will be correct and the trading goes back to normal (Rachev et al 126). IBM: For instance, on February 26th 2007 IBM was trading below the lower Bollinger band. This meant that the pressure was mounting and forcing the technical traders to sell more. Since the prices were that low, the strategy was to buy stocks the following day on which it turned out that the day was trading low (The Quarterly Journal). This was abnormal in financial markets and this led to down fall of the stocks even greater. (Lifted from StockCharts. com) The stocks were sold well and the business would close below the lower band till March 5th when the selling pressure ceased. This resulted to the band starting to expand and approaching the centerline although huge losses had already been incurred. Apple Inc: On 21st December 2006, Apple closed below the lower Bollinger band which required that stocks be bought the following day. The stocks traded on the lower band and thus the selling pressure continued to take the stocks down. This trend continued until 27th December when some relief was felt. (Lifted from StockCharts. com) In conclusion, Bollinger Bands are just like moving averages which contradict and expand as they move. As they move they form unique patterns that investors are able to observe. Bollinger bands are used as signals of when to sell or buy a stock in the financial markets. Though used as signals, they are not the final indicators as to whether the stocks are to be traded but other factors need to be considered (Schlossberg). These bands are easy to use and one need not go for classes to learn about how to use them in making decisions about stocks. Since prices in the short run are not predictable, investors cannot make decisions based on short-term period but since Bollinger bands are a reflection of a longer period of time, they can make their decisions on that (Schlossberg). List of References John Bollinger: The eSignal Bollinger Band Tool Kit, accessed on 25th September 2008 from http://www. esignal. com/solutions/studies/bollingerband_article. aspx , John Bollinger: Bollinger on Bollinger Bands: McGraw-Hill Companies. 2001 John Devcic: Tales From The Trenches: A Simple Bollinger Band Strategy: accessed on 25th September 2008 from. http://www1. investopedia. com/articles/trading/07/bollinger. asp Boris Schlossberg: Using Bollinger Band Bands To Gauge Trends: Accessed on 25th September 2008 from 38. 102. 154. 10/articles/trading/05/022205. asp Bollinger Charts lifted from StockCharts. com on 25th September 2008 John J. Murphy: Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications: New York Institute of Finance,Prentice Hall Press. 1999 324-430 The Quarterly Journal of Business and Economics, Spring 2007 Bollinger Bands: Accessed on 25th September 2008 from http://biz. yahoo. com/charts/guide13. html . Rachev; Svetlozar T. , Menn, Christian; Fabozzi, Frank J. , Fat Tailed and Skewed Asset Return Distributions, Implications for Risk Management, Portfolio Selection, and Option Pricing, John Wiley, New York (2005) 123-145 Technical analysis in the forex / Bollinger band : Accessed on 25th September 2008 from www. forexchannel. org/technical_analysis/bollinger_band/

Free Essays - Victorious Achilleus of the Iliad :: Iliad essays

Victorious Achilleus of the Iliad  Ã‚   From reading book twenty two in the Iliad it is clear, from the beginning, that Achilleus will prevail in the battle against Hektor.   The reader is given many hints from the text that Achilleus will succeed.   Homer, the writer of the text, feels he will win, and so gives the reader hints of his victory though his narration, and through the words of Hektor's parents, and the gods.   Ã‚  Ã‚  Ã‚   First, Hektor's father encourages his son to allow other men to fight with him in battle against Achilleus.   He says, "Hektor, beloved child to not wait the attack of this man alone, away from the others.   You might encounter your destiny eaten down by Peleion, since he is far stronger than you" (Homer 436).   Hektor's father assumes that if Hektor fights alone he will certainly lose.   Hektor's father knows what a great warrior Achilleus is, and so seeks to convince his son to cast away his pride, admit he is weaker, and solicit support from his fellow Trojans.   He has already lost a few sons at the hands of Achilleus and expects that Hektor cannot possibly win.   Since his father recognizes his weakness, this is the first hint about the outcome of the battle.   But Hektor, brave man that he is, will not be so easily convinced that Achilleus is stronger.   Even Hektor's mom is skeptical he can triumph over Achilles and begs him, "Do not go out as champion against him, o hard one; for if he kills you I can no longer morn you..." (Homer 437).   She too has little faith that he will overcome Achilleus and is concerned he will die at the hands of this great warrior.   She is so worried she does not even want him to fight.   Ã‚  Ã‚  Ã‚   Next, Homer gives the reader a few more indirect suggestions about the outcome of the battle.   When Hektor first sees Achilleus approaching, he does not act like a extremely brave warrior.   Homer explains, "And the shivers took hold of Hektor when he saw him, and he could no longer stand his ground there, but left the gates behind, and fled, frightened..." (Homer 438).   Obviously, it seems unlikely Hektor can slay Achilleus since he is so afraid he cannot even stand his ground.   If he has no confidence in his fighting ability surely most readers will also think he is unable to win and that is why he chooses his only option-fleeing.

India Shining Essay

It has been projected that by the year 2020, 62% of India’s population will be between the age group of 15 and 59 years. This is what is known as India’s demographic dividend. This means that while the average age of citizens in other countries is on the rise, a majority of India’s population will be in the employable age group. The question that arises here and one that has been on the minds of many Indians is; does the demographic dividend contain in it a ticking time bomb or will we be able to use this as an opportunity to realize our dream of India Shining? There has been a lot of talk about the opportunity divide in India. This Opportunity Divide is that by the year 2022, 800 million people will be in the working age group but out of these only 200 million will be graduates while the remaining will be in the unskilled group. According to research done by NSDC, between the year 2008 and 2022, 347 million jobs will be created across 22 different high growth sectors in India. For example, the jobs available in the construction industry will be about 33 million, in the auto industry about 35 million, in infrastructure 103 million and in retail about 14 million jobs will be available. The interesting fact here is that India will have both the jobs as well as a matching demographic of population that will have the potential to carry out these jobs. The question is will we be able to train so many people? The Indian government has set a target of training 500 million people by the year 2022, but is this target achievable? The target definitely is a daunting number. As an Indian I do hope that this dream is realized and am proud to be working for an organization that has done some exemplary work in this field. Pratham Institute has trained over 70,000 people through its various vocational training programs and is in the process of training more. I hope that people who come across this blog also find a way to contribute towards India’s future. Maybe then we’ll have the answer to the question raised by the title of this blog.

Physics of Music Essay - 851 Words

He who understands nothing but chemistry does not truly understand chemistry either Georg Christoph Lichtenberg (1742-1799) Music is not purely a form of art. There is a great deal of science that goes behind the production of beautiful musical sounds. In order to understand how music is possible, one must have an understanding of physics. Physics allows us to create musical instruments with different tone qualities and the ability to be played in a certain way to produce a specific pitch or note. Music is sound, and sound is vibrations or waves that are at the right frequency to be perceived by the human ear. Audible vibrations are waves with a frequency between 16 and 20,000 vibrations per second. So what causes sound waves?†¦show more content†¦The frequency of a vibrating string is 1) inversely proportional to its length, 2) directly proportional to the square root of the tension, and 3) inversely proportional to the square root to the mass per unit length. Waves with a higher frequency create a higher pitch. Therefore, to create a higher pitch on a stringed instrument you use your finger to fix the string farther down to make it shorter, use the tuning pegs to tighten the string, or play on a thinner string. Since there are no strings involved in wind instruments a different technique must be used to create a sound. In wind instruments, sound is passed through an air column. There are some differences in the physics of these vibrations. The motion in the air column is longitudinal rather than transverse like the motion of the waves in the string. Also, there is an open end and a closed end of the air column rather than the two closed ends of the string. In reed instruments such as the clarinet and saxophone, the sound is produced by the reed, a thin piece of cane that is placed on the mouthpiece in front of a slit that is slightly smaller than the reed. When air is forced through the instrument, the difference in pressure on either side of the reed causes it to move towards the slit. The reeds elasticity eventually causes the reed to move back to its original position causing a vibration. The pitch is determined by the length of the air column. The air column isShow MoreRelatedThe Physic s of Music Essay examples880 Words   |  4 PagesPhysical science is the study of non-living matter which I will be talking about the physics of music, and how pitch and frequency play a role together in science. Physics is known to be the most fundamental science, based on the principle and concepts. It deals with matter, motion, force, and energy, (Shipman-Wilson Higgins, 2013). In this report I will be dealing with pitch, frequency sound and waves which are also dealing with physical science and how they our related. 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