Discounted Price Probability

Trendoscope Wizard Mis à jour   
Here is an attempt to understand the probability of discounted price of a stock by comparing it to historical price and fundamental correlation. Have made use of some of the new features of pine in developing this script (Such as matrix and new features of tables such as cell merge and tooltip).

Script makes use of the library written on matrix matrix

🎲 Process

Probability is measured in two angles
🎯 Absolute : Measure the percentile of price and fundamentals with respect to all time high. The difference between the two is measure of probability of stock being undervalued.
🎯 Drawdown : Measure the percentile of distance from all time high for both price and fundamentals. The difference between the two is used for depicting the probability of stock being undervalued.

🎲 Components

In short, the definitions of stats presented are as below

🎲 Settings
Settings are pretty straightforward

🎲 How to look at these stats

To Start with
  • Are most of the fundamental values coloured in green? If yes, it means that they are near all time high in terms of percentile.
  • If drawdowns of fundamental values coloured in green? If yes, it means, the stock has not suffered much drawdowns of fundamentals from its peak.
  • Are the percentile values of drawdowns in green? If yes, it means, that drop in fundamentals are not high compared to its previous values.

If all the above are greener, then it means, company is in strong growth space.
Example: TSLA

Even though the financial ratios of TSLA are not in par with most of the fundamentally strong stocks, it is indeed growing steadily and at its near all time high.

Lets take another example of NKLA

Here the base columns regarding fundamentals are mostly red. This means, company has suffered setback with respect to their financials and the company is not where it used to be. But, if you see the differential probabilities, it says 92% of being undervalued?

Well, this is due to the fact that NKLA's fundamentals suffered most of the time and they are always below par when compared to price. Hence, such kind of cases may interpret the stocks as undervalued. Hence, even if the probability of being undervalued is more, it does not guarantee the quality of the stock. We need to be mindful overall financials of the company and how they fare with general standards.

Moving forward

  • To understand value of trending stock, use Absolute Probability (marked with P). Ex. GOOG, MSFT, BRK.B etc.
  • To understand value of stock which has been recently suffered huge price drop, look at drawdown based probability (marked with D). Ex. BABA, FB, PYPL, SQ, ROKU etc.

Some examples of high flyers:

Some for deep pullbacks:

And the meme stocks:
Notes de version:
Changes to getPercentileDrawdown function using yet another new pine method of binary search. Functionally, this does not change anything. But, improves the code performance.
Thanks to @lejmer for suggesting this improvement :)

Script open-source

Dans le véritable esprit de TradingView, l'auteur de ce script l'a publié en open-source, afin que les traders puissent le comprendre et le vérifier. Bravo à l'auteur! Vous pouvez l'utiliser gratuitement, mais la réutilisation de ce code dans une publication est régie par le règlement. Vous pouvez le mettre en favori pour l'utiliser sur un graphique.

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Les informations et les publications ne sont pas destinées à être, et ne constituent pas, des conseils ou des recommandations en matière de finance, d'investissement, de trading ou d'autres types de conseils fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.

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