The Basics - Rate of Return From Charts
Row 1: ends and length of logarithmic line touching EMA twice; gives chart R.O.R.
Here is the HAC.TO
Chosen because it pays no dividend. The upward slope is your total return.
, with a red dotted line drawn in after you hit annotate:
The cursor has been moved to
Put it on the little yellow dot.
There is a little gray bar at the bottom, ending in 17.13.
$17.13 for the price five years ago.
After entering that, we moved the cursor to the
The chart is five years wide. Enter that in the third box.
Press Submit to convert the three measurements to a slope in %/yr.
and measured $24.69. The calculator returns about 7%/yr as
This ETF is a parking spot for cash because its management parks its
capital in bonds once the 7%/yr gain has been secured.
Removing Up and Down Price Jumps:
The red dotted line has been moved to JUST TOUCH the
red EMA200 line in two places (eliminating
Until the next line - here we bridge over two wiggles to pick the slope out of it
volatility). Any straight line on the chart behaves
like a bond yielding interest and the dotted line
follows the price growth of the ETF, ignoring noise.
Why it works:
The charts we use are logarithmic. That converts an up-swooping price to a straight line.
(The Y-axis values are closer together near the top).
The slope of the line then translates into %/yr in the calculator.
Secondly, the price fluctuates in what are called
The EMA200 suppresses these waves if they are shorter than a year,
and bridging over two of the remaining wobbles will pick off the slope
over a period of about four years.
The EMA responds well to slope measurements, but the
that brokers commonly use tangles itself up attempting to measure %/yr. Avoid it.