Fourier Transforms
are used to detect cyclical patterns within price movements. A subdivision
of spectral analysis (used in general engineering), Fourier transforms
can be used to extract dominant cycles from any data series (e.g.
price or an indicator). The general principle is that you can approximate
any finite time series by breaking the data down into a set of harmonic
sine waves of differing pitch. Usually, analysis of security data
needs to be 'detrended' before a Fourier Transform is any use. Day
trading with Fourier Transforms may be difficult because of the
calculations required. If you want to try this in a dy trader's
timeframe, youwill need to configure your software for 'Fast Fourier
Trasforms'.
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