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Technicals

Characteristic line

One important term in finance is the Characteristic Line, which is the regression line derived from regression analysis. This line showcases the estimated linear relationship between the dependent variable, the factor we aim to explain, and the independent variable, the factor we use to explain it.

For instance, if we want to explain IBM's return by using the Dow Jones Industrial Index, we can represent this relationship through a linear equation: RIBM = a + bRDow Jones. The line with an intercept of a and a slope of b is known as the characteristic equation.

Bottom Reversal

Market bottoms refer to a point in the stock market where prices hit a low and begin to trend upwards. This change in direction, known as a reversal, can be a key indicato...

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Stochastic models

In finance, we often encounter the concept of liability-matching models. These models rely on the assumption that both liability payments and asset cash flows are uncertain....

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Intermediate Term

A financial term commonly used to describe a specific timeframe, usually in the range of weeks or months. It is an important concept in the world of finance, as it allows fo...

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Trading philosophies

Technical analysis includes study of price trends, volume, open interest, price gaps, support and resistance levels, and many other factors. In the world of finance, there a...

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