2. What is stock? Stock is a piece of ownership of a company. When a company needs to acquire extra money to help grow the business, they can sell or all of the ownership of the company in the form of stocks The company that shares the stock, calls Limited Liability Company(LLC)
3. Example of stock If a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company Company that have been paying dividends for years If you were to buy 100% of a company’s stock you would own the whole company
4. What is stock? There are two types of stock Common Stock: 보통주 Preferred Stock: 우선주
6. Data mining Data mining is the process of analyzing data from different perspective and summarizing it into useful information Information that can be used to Increase revenue Cut costs
8. Analysing Stock Five methods of analysing stocks were combined to predict if following day’s closing price would increase or decrease. Typical Price (TP) Chaikin Money Flow Indicator (CMI) Stochastic Momentum Index (SMI) Relative Strength Index (RSI) Bollienger Bands (BB) Moving average (MA)
9. Typical Price Algorithm: The result is the average, or typical price TP > benchmark : sell or buy stock
10. Moving Average Shows the average price over a period of time There are 2 types of Moving Average - Simple Moving Average (SMA) - Exponential Moving Average(EMA)
11. SMA Calculation A simple moving average is formed by computing the average price of a security over specific number of period Based on closing price Daily Closing Prices: 11, 12, 13, 14, 15,16,17 First day of 5-day (11+12+13+14+15)/5 = 13 Second day of 5-day (12+13+14+15+16)/5 = 14 Third day of 5-day (13+14+15+16+17)/5 = 15
12. EMA Calculation Exponential moving averages reduce the lag by applying more weight to recent prices There are 3 steps to calculating an EMA 1. Calculate the simple moving average. 2. Calculate the weighting multiplier. 3. Calculate the exponential moving average.
13. EMA Calculation 1. SMA : 10 period sum / 10 2. Multiplier : (2 / (Time periods + 1 )) = = (2 / (10 + 1)) = 0.1818 (18.18%) 3. EMA : {Close – EMA(previous day)} x multiplier + EMA(previous day)
15. Relative strength Index Relative Strength Index is a momentum oscillator that measures the speed and change of price movements. RSI oscillates between 0 – 100. Calculation: RSI 70 – Overbought RSI 30 - Oversold
16. Relative strength index RSI = 100-(100/1+RS); RS = AG/AL AG = [(PAG)x13+CG]/14 ; AL = [(PAL)x13+CL]/14 ; PAG = Total of gain during past 14 periods / 14; PAL = Total of losses during past 14 periods / 14; Where AG = Average Gain, AL = Average Loss, PAG = Previous Average Gain, CG = Current Loss, PAL = Previous Average Loss, CL = Current Loss
17. RSI algorithm Upclose = 0 DownClose = 0 Repeat for nine consecutive days ending today If (TC > YC) UpClose = (Upclose + TC) Else if (TC < YC) DownClose = (Down Close + TC) End if
