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.The Prime Number Bands indicator
was developed by Modulus Financial Engineering Inc. and it shows the nearest prime
numbers, both highs and lows and plots the difference between them as bands, on
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.
Another widely used trading strategy is the Darvas Box, developed in 1956 by former
ballroom dancer Nicolas Darvas. His trading method was to buy stocks that
reached a higher value than the highest value they had in the past 52 weeks. The
volumes he would buy would match the value prices extended to. In this manner, Darvas
made a lot of profit in 1956, transforming $10,000 into $2 million in just 18 months.
Skeptics say he only managed to be successful with his method because he was trading
in a bullish market and that the same technique would not work in a bearish market.
On the other hand, his strategy asserts you should only buy when the price has surpassed
highest price of the past 52 weeks, as long as that price doesn’t fall too
much, because in this case it could be the sign of a false breakout.The prime number
bands indicator is a new approach to Darvas’ box and is used to forecast market