I have bought a currency while the rate was 1.0. As soon as the conversion rate has increased to 2.0 I would like to sell the currency. Now, that would be an easy task to do. But we are not searching for "easy" tasks, are we?
What if there was a way to determine, whether the rate is still growing or not? For example, what if the conversion rate was still growing at +0.5 per minute, in that case - I would be able to sell the currency at rate 3.0 if only I have waited for 2 more minutes. Alternatively, I would be able to sell the currency at an even higher rate, if it was determined that the acceleration rate either stopped, or became negative.
Here is a visual representation of what I want to accomplish:
- black line - good, but too early to sell
- green line - sell now
- red line - better sell it now, before rate decreased
Is there an algorithm to accomplish this task?
At this point - it is not clear to me:
What would be the best time range to take into acceleration rate calculations. Should I consider the rate change during the last 10 minutes, 5 minutes or 20 seconds?
How do I determine that the "growth" (acceleration rate) has stopped or is close to being stopped?
Do I only need to know only the conversion rate, or also number of trades (buys/sells) at a given time frame?
Any advices are appreciated.