Determining market trends has become a science even though a high number or people
still believe it’s a gambling game. Mathematicians, technicians, brokers and
investors have worked together in developing quite several indicators to help them
better understand and forecast market movements.
Developed by Modulus Financial Engineering Inc., the prime number oscillator indicates
the nearest prime number, be it at the top or the bottom of the series, and outlines
the difference between that prime number and the respective series.
We call prime an integer positive number that has no positive integer divisors other
than 1 and itself, so it is a positive integer (p>1) that has exactly one divisor
other than 1 (17 can be divided by 1 and 17 – it’s prime; 18 can be
divided by 1, 2, 3, 6, 9 and 18 – it’s not prime).Numbers that appear
in a specific order are said to create a sequence. Similar to a set, a sequence
contains elements (terms), but unlike a set, the terms of a sequence follow a specific
rule, are situated in a certain order.
In mathematics, the Fibonacci numbers create the following integer sequence : 0,1,1,2,3,5,8,13,21….
. Traders use this sequence to determine future market movements. The Fibonacci
sequence is applied in trading through several methods and they are comprised in
the Fibonacci Box. The box contains: the Fibonacci extensions, retracements, circles,
fan and time methods. Using the numbers in this sequence and sometimes the sequence
itself, investors manage to time certain turns in the financial market movements.
One way to use prime numbers in trading is through the prime number oscillator.
It is highly useful indicator in identifying changes in the market. As it underlines
the difference between the nearest prime number and the evolution of the prices
series, it is easy to see when it is better to buy or sell.Therefore, whenever the
indicator is constant and at a high value in the positive chart, the best choice
is to sell, and oppositely, when the indicator is low for two consecutive periods
and is situated in the negative range, acquisition is recommended.
As for many other indicators, the parameters taken into consideration are the market
open/close period, the highest and lowest point of the price of a stock at the exchange
in the immediately preceding 52 weeks or the volume of stock (the average of total
traded stocks at the exchange over a period of time).
The prime numbers oscillator is realitevely easy to calculate. This indicator finds
the closest prime number from the top or bottom of the series, and then plots the
difference between that prime number and the series itself.