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Andreas Grau wrote:
"Perfect profit is a theoretical measure of market potential. It is the
total dollar profit resulting from buying every valley and selling every
peak that occurs in price movement. Obviously, this is an impossible task,
hence the name perfect profit. Mathematically, it is the sum of the
absolute price differences."
Now for my question: Would it be better to add up ABS(HIGH - LOW) or better
ABS(OPEN-CLOSE) ? Or even some other calculation?
I think not. Having a realistic measure of potential profit - even if highly
optimistic - is still important. For example, imagine a period of huge
volatility/ choppy price behavior. Here summing the absolute price
differences or any of your suggestions would lead to highly unreasonable
approximations of potential profit.
FWIW, my own preference would be to use pivot points of various strength
instead.
Cheers,
Cab Vinton
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