The next example improves on this somewhat by comparing today's closing value to the average closing value over a period of time (in this case, 10 days): Of course, this example only compares two values at two different points in time it doesn't determine how much fluctuation in price might have taken place between those two points. Thus, today's close would need to be above 29.4 and below 30.6 to meet the criteria. These multipliers allow us to determine if today's closing price is within the acceptable range.įor example, if the close 5 days ago was 30.0, then the lower limit would be 29.4 (30.0 * 0.98) and the upper limit would be 30.6 (30.0 * 1.02). Similarly, we will multiply by 1.02 (102%) to set the upper limit of our acceptable range, which is 2% above the price from 5 days ago. 100%-2% is 98%, so we will multiply the price from 5 days ago by 0.98 (98%) to get the lower limit of our acceptable range. We calculate “within 2%” of the closing price 5 days ago by subtracting or adding 2% from that price. This very simple example uses multiplication to determine that the closing price is within 2% of the closing price from 5 days ago:Īnd
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