Home > Uncategorized > Elements of the Probable Price Range (PPR)

Elements of the Probable Price Range (PPR)

Below is a, hopefully, brief outline of the elements behind the Probable Price Range.

1. The square root.  The expected maximum daily price move of a stock, commodity, etc. is the square root of its price. For example √9 = 3. So, a $9.00 stock might move as low as $6.00 during a trading session or as high as $12.00. While such a move may not be likely, it is mathematically within the realm of possibility. How square roots are used within the Probable Price Range (PPR) is much more complex and nuanced than the above example.

2.Action-Reaction. Alan Andrews discusses the idea in the video below:

Alan Andrews developed, his Andrews’ Pitchfork, at least in part, based on the Action-Reaction work of Roger Babson. In terms of the PPR, Action-Reaction is relevant because price movements up and down must eventually achieve some sort of balance. This doesn’t necessarily mean that a $10.00 move up must be balanced by a $10.00 move down, but movements must eventually achieve a kind of balance. At a later date we will discuss more about this in terms of our Balanced Price Ranges (BPR).

3. Golden Mean aka Golden Ratio. The Golden Mean or Golden Ratio has an important role to play in determining the extent of price movement. It will tend to restrict prices from moving to the maximum extent that is possible as determined by the square root of the price. The Golden Ratio is also important as it relates to our Positive/Negative Ratio (PNR) and Negative/Positive Ratio which we shall discuss another time.

4. Another important factor to consider when looking at a Probable Price Range, or in any type of price forecasting, is to use some means to account for momentum of price movements. This is related to physics, geometry, and the squaring or balancing of time with price which W.D. Gann discussed.

5. Murrey Math. It would be impossible to discuss Probable Price Ranges without Murrey Math. Murrey Math is essential not only in terms of understanding support and resistance levels (assuming you’re attempting to invest based, in part, on the PPR), but it is also extremely important in terms of understanding price cycles. In fact, there are at least two cycles related to Murrey Math. One is the Standard Cycle where price moves in a more or less orderly and predictable manner. The other is the Phase Cycle where an increase or decrease of energy, or momentum, in the system causes price to move up or down to another level.

The above is only part of what goes into the calculation and construction of the Probable Price Ranges or PPRs seen on this site. Hopefully it will give you some small insight into the construction of these ranges and a base to work from should you decide to construct something similar on your own.

 

 

 

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Categories: Uncategorized
  1. Terry Kinder
    September 1, 2017 at 7:53 am

    Yes, it is. Thanks for catching the mistake.

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