Statistical Indicators

Moving Averages
This type of indicators attenuates the fluctuations of the securities (in many cases as consequence of their stationary position) helping to identify the tendencies and the possible changes of direction. The moving averages can be calculated from indexes of a group of securities or well from the quotations of an only security, characteristics of moving averages:

They are resistance lines to rises or falls.

For the signals of surpassing of the average not to be taken as a false alarm, it has to excel as minimum a 3%.

The overcoming of the average are convenient that they come confirmed from a significant change of tendency from the own average.

The terms for calculating the average can be short (the data from 10 sessions as maximum), medium (data from 50 or 70 sessions), or long (data of around 200 sessions). The longer the term, the more revealing will the signals be.

It is recommended to work with more than one moving average at the same time. When the short-term averages surpass the averages of a longer term, the signals for buying or selling can be confirmed.

There exist three types of moving averages: simple, hyperbolical and exponential. In the first, all the prices of the period have the same consideration, while that in the hyperbolical and exponentials recent prices are prime.

Oscillators
They are indexes that fluctuate around a reference strip. They are the first to inform of the changes of tendencies before the averages and the lines of resistance do.

One of the most powerful oscillators of prediction is the RSI, (Relative Strength Index).

RSI Oscillator
This oscillator is used to obtain selling or buying signs due that it detects when a share is overvalued or undervalued.

It takes data in reference with the increase and decrease of former prices in relation with that of payment prices of around 10 or 15 sessions.

An average is made of the increment produced at the sessions in which there has been a higher closing price than that of payments and the average of the decreasing at the sessions in which there has been an inferior closing price to that of the opening.

For its calculation the following formula is used:

RSI = 100- 100
                      PI
               1 + PD

PI= Average of increment of closing prices in relation to the former session.

PD: Average of descent of closing prices.

For the interpretation of the RSI: When its value exceeds 60 or 70 it indicates that the security is overbought and by so in the selling zone and when it is under 40 or 30 the security is over sold and by so in the buying zone. The intermediate strip is neutral.

Projections
By the use of this statistic technique you may obtain the foresight of the quotations of a company. When obtaining the corresponding projection, the way to act is the following:

To buy the securities when the quotations are above the recta and to sell them when they are below it. This way of operating will only be correct if the regression takes the same orientation in the future; in case of changes of tendency you might make important errors o the taking of a decision and consequently will cause great losses for the investors.

Moment
It’s about an indicator of velocity of the rises and of the drops of quotations. It serves for detecting overvaluations or under valuations and, it also gives you the signs for selling or buying. For its calculation it uses information of the last closing prices of the corresponding sessions (usually 5 to 10 sessions).

The evolution of the moment can be analyzed jointly with the quotation of the security. Generally, the highest moment is given at the beginning of a rising phase and when the moment begins to descend it is a signal that the phase is ending. When it rises again, there is another sign for buying.

Volumes
The volume is an indicator of the fortitude of the market, understanding for volume the number of securities traded on a determined period. When the volume rises on a rising phase or when it descends on a falling phase, the market is strong.

Width
It is calculated starting from the quotient between the adding of the rises and descents of the securities that have change in a week term and those that haven’t changed on that period. If the value of the quotient is around 1 or 0.9, or lower, it is a sign of change of tendency on the market.