The stock market is the aggregation of buyers and sellers of stocks, these stocks are equities in companies and this market plays part in a huge community and is used by investors and the populations that use it to make their lively hoods. The whole method associated with being successful in stocks is the ability to predict the fluctuations, dips and peaks in price of equities and decide in selling or buying certain stock in hope of turning a profit. This idea of prediction and probability brings in the prospect of utilizing mathematical and statistical methods in order to increase your probability of success to its limit. There are many viable systems and practices that seem plausible such as Gaussian Laws which calculates random fluctuations of uncorrelated entities. This sounds ideal for playing the undulating stock market however, all stock transactions are correlated, an influx of buys in one company causes the stock to rise exponentially. Given this, we can instead use Power Laws, these laws calculate how the change in one quantity affects another. Using these Laws, we can then proceed to calculate standard deviations for certain stock and help traders identify the risk of certain companies and which give the general highest probability of turning a profit. One more statistical practice we can use is Quantitative Analysis, studying how amounts or quantities relate to each other and can help develop a model of the stock market helping trading houses. All these methods are accurate to some extent however they come with many limitations and drawbacks.
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162901
First name
Andrei
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King College London Maths School
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