Step into my classroom, will you? Let's take a quick foray into a typical traders analytical arsenal. Any trader will tell you that the trend is your friend. I agree, but what do traders most commonly track trends with? Lines. I'm talkin' slope and intercept, y=mx+b, lines.
To this day, the most commonly used analytical tool to track trends on a chart is by far a line. Lines are drawn for support, resistance, from highs to highs, and from lows to lows.
What if we started using slightly more complex functions to track trends? The exponential function is a clear front runner here due to it's natural ability to track growth and decay. We can even add noise using trigonometric functions such as sine and cosine.
I think a little bit of, relatively simple, mathematics still has the potential to go a long way in the stock market. You'll find out based on whether I wind up in a penthouse or in rehab. Or both.
"Make things as simple as possible, but not any simpler." - Albert Einstein
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