To put it to rest I will present a simple formula and give you the numbers of how well a long-term investor can hold a stock if the stock price changes. In this formula, we are using S&P 500 index (SPX) stock price and the daily swing average value. We are using a moving average price.

The formula works very well when the stock price has a large number of high and low moves that are occurring concurrently. For example, if the stock price is dropping 10%, your stock price will go down 5% but after the 10% drop it drops the next 8%. This is an example of a large number moving within the same frame.

So, for example, if the stock price is at $50 and the daily swing average is $50, then holding for 100 days and ending up at $65 would result in a total gain of $65. The first number in the formula is the change in the stock price, the second number (Change in Swing Average) is the price change divided by 100, and last is the change in the total value.

Here the formula works:

S&P 500(Index Price) = (Change in Value / 100) * ((change in price – value)/100)

Example #2 – The Daily Swing Averages and Stocks

The final example I will present shows the formula and what is needed to calculate the difference between the current swing price and the Daily Stance Average.

Example #2 – The Daily Swing Average

Consider a stock’s daily swings. You need to know the number of swings a stock had within the previous 24 hours and the average of these swings. So, for example, if the stock price is at $50, the Daily Swing Average value is $47.51.

Let’s say the stock is down 10% today and then goes up 5% in 24 hours and then drops 10% the next day. The Daily Swing Average would be $43.29 and the Total Gain Gain $25.01 due to the large increase in the stock’s value.

Step 2: Calculating total Gain Gain = Stock Price – Current Daily Swing Average Gain

Calculating the difference between the Daily Swing Average and the Stock’s Stock Price is easy, but how do you figure the difference between the number of swings and the total Gain Gain? I will use another simple concept to help you figure that out.

Step 3: Stock Price – Stance Price

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