Re: stochastic distribution

["Walter Lake" <wlake@xxxxxxxxx>]

Thanks Chuck for your reply

Slide #17 of the series confirms what you said, i.e., " ... u is the
stochastic or random term ..."

http://econ-www.newcastle.edu.au/economics/econ245/lecture2/sld015.html

Slide 16 "A Stochastic Model"
lists the  General form of the equation
a Specific Linear form of the equation
and a Stochastic form of the equation

Where the "u" is the error or disturbance term in the Stochastic form of the
equation.

James Holter's April 1998 article "Model-building Basics" in Futures
Magazine has a similar chart and long article on regression analysis.

So it's off to work ... lots to learn.

Howard Simons sent this back to me.

"Nothing illogical about Nos. 3 and 5.  Remember, this is the stochastic
relationship of the open-to-close in relationship to the daily range..."

Best regards

Walter

----- Original Message -----
From: Chuck Wemlinger <wemlinger@xxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Wednesday, April 28, 1999 10:52 PM
Subject: Re: stochastic distribution


> Hi Walter,
>
> Stochastic is actually a misnomer for the popular Lane's Stochastic that
we
> see in the normalized indicator.  It's actually a synonym fro 'random'.
(ref
> TASC V.9:3)  I think the picture is drawn weird so it looks like somthing
> else is going on but I think it's just showing a random distribution
equally
> +/- from the slope line so it could represent a 1 Sigma or say 3 Sigma
> channel.  I guess.  (Don't) Believe me I'm no math expert.
>
> Chuck
>
> ----- Original Message -----
> From: Walter Lake <wlake@xxxxxxxxx>
> To: Metastock bulletin board <metastock@xxxxxxxxxxxxx>
> Sent: Wednesday, April 28, 1999 5:36 PM
> Subject: stochastic distribution
>
>
> > Does anyone know what a "stochastic distribution" of the day's range is?
> >
> > I assume that it is the normalization of the day's range between 0 and
100
> > for the high and the low and that the open would be placed "on" the
> > distribution ... say at 65.
> >
> > Could anyone explain the enclosed slide "A Stochastic Relationship"
which
> > shows 3 high low daily ranges from
> >
> > http://econ-www.newcastle.edu.au/economics/econ245/lecture2/sld015.html
> >
> > Best regards
> >
> > Walter
> >
>