U

.........................................................................

Of late few terms like 'time series' / 'data mining' / 'Random' / etc etc are being

related to some thing of irrelevance than Basic indicators ( RSI / MACD etc),what

we learnt & found time & again in your experience to work in actual Mkt situation.

Hence those Guys are subtlying trying to propaganda their 'Knowledge'

they are at best 'Masterji' but drifting away from actual objective of Wealth Creation. These 'Geeks' objective is for PHD than money earning.

This post is of my personal inferences,on above subjects.

What is RSI ?

In layman's term ,in June 1978 ,in an article of Futures magazine Welles Wilder,

devised this Oscilator with a fairly simple formula

U= An Avg of upward price change,

D= An Avg of downward price change,

100 - [ 100 / ( 1 + (U/D) ] this is normally done on Close ,with different time period.

We will refer this at later stage of this post.

What is Time series ?

In statistics, signal processing, and econometrics, a time series is a sequence of data points, measured typically at successive times, spaced at (often uniform) time intervals. Time series analysis comprises methods that attempt to understand such time series, often either to understand the underlying theory of the data points (where did they come from? what generated them?), or to make forecasts (predictions). Time series prediction is the use of a model to predict future events based on known past events: to predict future data points before they are measured. The standard example is the closing price of a share of stock based on its past performance.

So now all CLOSE on the right hand side of chart (will come on Monday) at specific interval (say EOD), CAN THIS BE A TIME SERIES ? Yes no confussion this closes or / O / H / L etc are variables (becoz everyday it varies ,not constant) in respect to TIME (each end-of-day),hence nothing but a Time Series Data.

So why these geeks are confusing us ? by not mentioning close but with a swanky word like 'Time Series' ? Becoz by renaming they suddenly Hit us in

conceptual level,broadening the horizon.How ? Let us dissociate from chart CLOSE & shift to say Appolo Hospital's Intensive Coronary Care Unit,a heart patient ,on constant monitering programme,his ,mine (incidentally Ratan's heart in remembrance of Vabhna)all beats per minute ,means each beat=intraday data ,beats per min=close,every min=EOD,is also a Time Series.If the patient has Tacchy cardia(above normal beats/ min) or Bradycardia(below normal beats/min)

These signals of heart ,means heart's time series is transfered by ECG to a chartical format,which the Cardiologist can read,he can actually Predict a below normal beat ( a selling phase in say Bajaj Hindusthan) to be a partial RBB(right bundle block) his terminology for RSI's divergence/convergence,& he convey's to patient party nothing to worry about,this is actually a manifestation of Diabetic Neruropathy of the patient(forget terminologies of the Dr read it ,a Financial Analysts reading of Sugar sector vis a vis county's GDP ,blah blah) .

What is Montek Singh Aluwalia at Planning Commission & RBI governor Dr Reddy doing day in & day out ? Grasping this Time Series to Forecast.The GM of Volkswagon or Nandan Nilkeni of Infosys is giving guidance ,means forecasting by analysizing time series data.

Hence all the World's knowledge of forecasting based on Time Series Data is now at our doorstep,their methods of tackling Random ,India's vast terrain with it's imensely scattered economic activities when its GDP can be forecasted accurately (except to the decimal points),why dont we explore the Modules they are using ,so as to forecast the right side of the chart ?Let us plz take advantage of this Huge Knowledge base to better forecast To-morrow.This conceptual change was the purpose of these PHD wallahs.

Now to Data & approach to data bank.

Data Mining

Data Mining is an analytic process designed to explore data (usually large amounts of data - typically business or market related) in search of consistent patterns and/or systematic relationships between variables, and then to validate the findings by applying the detected patterns to new subsets of data. The ultimate goal of data mining is prediction - and predictive data mining is the most common type of data mining and one that has the most direct business applications. The process of data mining consists of three stages: (1) the initial exploration, (2) model building or pattern identification with validation/verification, and (3) deployment (i.e., the application of the model to new data in order to generate predictions). (CV's post has opened my eyes)

In layman's term it is a prefabricated data,before we do any analysis on it.

We all know RSI(14)

Tell me why we normally use close ,have we used Median Price instead of close.

For any Large candle close is more skewed ,becoz of the High Range of that bar.

In case of Divergence/Convergence try Median Price a more clear picture will emerge. This Median price use is one kind of crude data mining.

Now let us revert back to W.Wilder's formula of RSI(14) he has mined (prefabricated) in 2 variables U & D of the Time Series (close) in a sample test (drawn out 14 periods from say 10000 bars) there can be another method of sampling of data,unlike last 14 days ,we can at random take representations of this last 10000 bars & with a reference point say yesterday's close (substract it to get Up & Down & those difference figs ,convert to log scale & then make a RSI .

There can be 100 methods but the logic for doing that has to come from my conceptual understanding & why ? all these are Data Mining & Time Series Forcast.These guys are actually helping us ,to discard their concept will be like my attitude towards computer few years back,which will retard my pace to "Wealth Creation"

Thks to all senior members who have actually by their posts helped me & helping me.