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Strategies & Market Trends : Technical Analysis- Indicators & Systems
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To: David Russell Coburn II who wrote (1367)6/10/1997 4:37:00 AM
From: Bruce A. Bowman   of 3325
 
Just a quick comment about stock prices and your concern about using low priced stocks... remember that when you look at price data that is lengthy, what you see as a $5 dollar stock in 1994 may have actually been at $60 but has seen many splits. Dogs are dogs and aren't appropriate for trading, but using all the data for WMT will have you looking at prices < $1.00, but at the time they were > $10.00. So you have to understand how the prices have evolved. With this in mind, using percentages as you mentioned earlier should resolve the transaction differences.

However, this does bring up another point that can throw off test results when you use data that runs from 0.170/shr up thru 114.000/shr: if you use fixed dollar investments, the number of shares you'd buy in the distant past will be significantly more than if you were actually trading in the past. So using a % of trading capital or a multiple of price might be a better way to test a system that uses data that has had splits.

Bruce
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