V.6:8 (314-315): Computing curved trendlines by Arthur Merrill
Product Description
Computing curved trendlines
by Arthur Merrill
Data sometimes shows a tendency to level off with a downward curve. A curved trendline, in these cases, would be more useful than a straight line.
Quite often, the data rises more and more rapidly, like a skyrocket. If this is the case, a curved trendline would be more useful than a straight line.
The upward curving tendency may be caused by the distortion of the arithmetic scale, which makes a given percent increase appear large at the top of a chart and small at the bottom. This distortion can be cured by using a logarithmic scale and then a straight line might be appropriately used. This "fitting" can also be done by adding another column to the spreadsheet introduced in the previous issue and computing the logarithms of the data. The straight line is then fitted to the plotted logarithms.
Curved trendlines can be drawn freehand or fitted approximately with the aid of a french curve. They also can be fitted mathematically using the least squares method which was described in my column last month. A popular curve for this purpose is the second degree parabola or second degree potential series with the formula:
Data sometimes shows a tendency to level off with a downward curve. A curved trendline, in these cases, would be more useful than a straight line.
Quite often, the data rises more and more rapidly, like a skyrocket. If this is the case, a curved trendline would be more useful than a straight line.
The upward curving tendency may be caused by the distortion of the arithmetic scale, which makes a given percent increase appear large at the top of a chart and small at the bottom. This distortion can be cured by using a logarithmic scale and then a straight line might be appropriately used. This "fitting" can also be done by adding another column to the spreadsheet introduced in the previous issue and computing the logarithms of the data. The straight line is then fitted to the plotted logarithms.
Curved trendlines can be drawn freehand or fitted approximately with the aid of a french curve. They also can be fitted mathematically using the least squares method which was described in my column last month. A popular curve for this purpose is the second degree parabola or second degree potential series with the formula:
FOR THOSE ORDERING ARTICLES SEPARATELY:
*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.
| Take Control of Your Trading. |
| Professional Traders' Starter Kit |
| All these items shown below only $299.99! |
| Click Here to Order |