Among market analysts, the prevailing opinion is that stock prices are dependent on so many factors that they cannot be predicted.
The attractive prospect of "making" a lot of money prompted many mathematicians to develop various methods for forecasting prices.
And the era of indicators begins.
I will omit the chronology - the essence
The number of known indicators has long been thousands. Now the fun part.
eg
The oscillator, popularized by George Lane, is very similar to the Wells Wilder RSI line, but it’s actually an improved version of the% R Larry Williams oscillator.
It seems that there is not a single trader who has not heard of Larry Williams and Jordan Lane.
Larry Williams, a proponent of the fact that past price behavior directly affects their future behavior.
He advises first of all to decide on such a concept as a "cycle".
For almost fifteen years he was engaged in the search for a time cycle, but did not find anything.
There is nothing to do - the impasse begins
Williams invents cycles
for example, called the “natural range changing cycle”
Larry Williams presents it in the form of a “drunken sailor's walk”, when various and even the most unthinkable trajectories are possible when moving from point A to point B. Most importantly, our sailor will in any case reach point B
, Williams indicators are born - Larry Williams% R Oscillator
this genius does not understand, in fact, such an indicator is an indicator of volatility
And if this is so, then naturally it should be connected with something, and this can only be connected with the previous trend.
Even funnier with George Lane.
was about to become a doctor, like his father. One day, he accidentally visited the stock exchange and saw that he was very interested, for $ 25, bought a membership in the Chicago stock exchange and started selling grain.
Some old Czech told Lane in broken English about the formula that they used in Czechoslovakia when they needed to find out how much limestone had to be added when smelting into iron ore to produce steel.
Lane took this formula, adapted it to his goals, and began to play with it.
As a result, stochastics are born.
Then all the calculations had to be done manually, and they developed formulas for the oscillators, giving them the names% A,% B,% C, etc.
If, for example,% K,% D and% R are relatively effective. - nishtyak, flooded and further everything from this base stretches to the present day.
Here you are
Exponential Moving Average (EMA)
Smoothed Moving Average (SMMA)
Linear Weighted Moving Average (LWMA)
Etc
Murphy, Bill and Williams Williams, De Marco and a dozen or two “authorities” of the market will prove the need and exalt the quality of their work.
Since any oscillators are based on the same base, it makes no sense to use them
