Crash graph market stock
The stock market has all that necessary potential to touch highest point on the crest. Generally it takes some time to move upwards but it is beneficial from the view point of the long term investors. A stock market crash graph is nothing but a graph which shows the behavior of the stock market index at the time of its larger fluctuation simultaneously accompanying the onset of the crash. Many people believe that a lot of unusual events preceding the crash in the past. These findings can help economists to find reasons of stock market crash and to predict future inevitable crashes.
Reasons of stock market crash:
Though a normal stock market prices fluctuation is a common phenomenon, nobody knows about the exact reason of the major stock market crash. While researching on past stock market crashes the Japanese physicists observed some kind of startling behavior of logs in the graph, preceding market crashes. In the major past stock market crashes, the large price fluctuations possibility increased beyond imagination as if it is approaching a critical point implying a drastic change. On the day of the crash at the critical point of the graph, a sudden transition occurred as the probability prototype changed from being scale dependent to scale invariant.
Thus many people tend to believe that an increasing possibility of fluctuation in price is the strongest reason for stock market crash, but it is considered to be the same according to the most promising statistical analysis. According to the report the external factors are not held responsible for stock index crash. It is observed that extreme price fluctuations occurred in long return of the graph during the Gulf War between Iraq and Kuwait in 1990, which ultimately lead towards reducing of stock prices. At that time the domestic dynamics of the stock market underwent a phase transition and a radical change resulting into non occurrence of a critical point in the graph.
Observations of the past Stock Market Crashes:
It is observed in the past that the stock prices start to follow a distinctive behavior pattern similar to that of earthquakes and heartbeats, shortly before and after the stock market crashes. These observations prove helpful in predicting the future stock market crashes but cannot prevent it from crashing. During the course of research the Japanese researchers observed that almost more than a days time frames, short duration changes in stock prices generally obey a statistical pattern class which consists of relatively small predicted changes. But according to the researchers observations, in around two months duration before or after the major past stock market crashes, all sizes of fluctuations take place. An important effect of this phenomenon was observed as a fluctuation graph if plotted over different time scales of four minutes to two weeks, looks statistically alike.
Advantage of past stock market crashes research:
The observations of research may help in creating an early warning system for stock market crashes but there is a fear of spreading fear among the traders due to this early warning system which can cause a stock market crash again.
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