Method for estimating whether a stock is over-valued or under-valued
First Claim
1. A method for determining whether the price of a stock is over-valued or under-valued;
- the method comprising the steps of;
a) determining the buy and sell order values placed on a selected stock by multiplying each order price by the corresponding order volume;
b) accumulating buy order value for a selected period for said stock;
c) accumulating buy order volume for said selected period for said stock;
d) dividing said accumulated buy order value by said accumulated buy order volume to, establish a buy price channel line;
e) accumulating sell order value for said selected period for said selected stock;
f) accumulating sell order volume for said selected period for said selected stock;
g) dividing said accumulated sell order value by said accumulated sell order volume to establish a sell price channel line;
h) treating the difference between said buy price channel line and said sell price channel line as a price channel indicator for said stock; and
i) accessing said stock as over-valued if its actual price exceeds said sell price channel line, under-valued if its actual price is less than said buy price channel line and neither over-valued nor under-valued if its actual price is within said price channel indicator.
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Abstract
By analyzing the real-time order flow sent to electronic trading systems such as NASDAQ or individual ECNs and by analyzing the resulting price of the matched execution of buy and sell orders, very accurate lag-free indicators that show the true forces behind the normally considered random intraday price movements of the stock market can be created. These indicators, combined with the stock prices, show how overvalued or undervalued individual stocks or the whole market is compared to what the consensus price should be, based on the actual order flow. This enables traders to take advantage of intraday market price fluctuations of up to 2-4% and, up to hours in advance, to know when a current price move in the market is false and when it is very likely to reverse direction.
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Citations
19 Claims
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1. A method for determining whether the price of a stock is over-valued or under-valued;
- the method comprising the steps of;
a) determining the buy and sell order values placed on a selected stock by multiplying each order price by the corresponding order volume;
b) accumulating buy order value for a selected period for said stock;
c) accumulating buy order volume for said selected period for said stock;
d) dividing said accumulated buy order value by said accumulated buy order volume to, establish a buy price channel line;
e) accumulating sell order value for said selected period for said selected stock;
f) accumulating sell order volume for said selected period for said selected stock;
g) dividing said accumulated sell order value by said accumulated sell order volume to establish a sell price channel line;
h) treating the difference between said buy price channel line and said sell price channel line as a price channel indicator for said stock; and
i) accessing said stock as over-valued if its actual price exceeds said sell price channel line, under-valued if its actual price is less than said buy price channel line and neither over-valued nor under-valued if its actual price is within said price channel indicator. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11)
- the method comprising the steps of;
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12. A method for predicting the future price of a stock by estimating whether that stock is currently over-valued or under-valued;
- the method comprising the steps of;
a) receiving buy and sell order data for a selected stock over a selected period of time;
b) employing said order data to determine buy order value, buy order volume, sell order value and sell order volume of said stock accumulated over said period;
c) producing a buy price channel line based upon a ratio of accumulated buy order value to accumulated buy order volume;
d) producing a sell price channel line based upon a ratio of accumulated sell order value to accumulated sell order volume; and
e) comparing the current price of said stock to said buy price and sell price channel lines. - View Dependent Claims (13, 14, 15, 16, 17, 18, 19)
- the method comprising the steps of;
Specification