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CONVERGENCE METHOD

This method performs a series of matrix multiplications until the difference between the new and previous matrix is very small. Following the procedure in Chapter 2,-Basic Concepts," we can create a 3 x 3 frequency maU-ix by counting the number of up, down, and neufral dajs that follow other up, down, and neufral dajs. We use the term neufral to allow very small price changes to be considered in this group, rather than limit it to only those dajs with zero changes. For this example we will look at the number of up, down, and neufral dajs that follow a 5-day frend that was considered up, down, or neufral on the previous day. Suppose the results were those shown in the frequency matrix F.

Divide each item in F by the total given at the end of that row, and get the probability of each occurrence in a

transition matrix T

Now it is necessary to perform matrix multiplication. To multiply matrix A by matrix B, we multiply the corresponding items in row i of A by the corresponding item in column j of B, add those products together to get the item in row i, column j of the new maUix If we have two 3x3 mafrices A and B, and we wanted to fmd the element in row 2, column I of the new product matrix C, we would multiply and add

Trigonometric Regression for Finding Cycles

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