An association between bid series and transaction price facilitating trading decision making based on VPIP algorithm

The stock price has long been an essential issue in stock market analysis, while rarely had any relevant study covered the relational effect of the bidder factor on stock price. Hereby we try to find an association between bid and transaction price time series. The fluctuation of pattern ratios embedded in the bid series affects the fluctuation of transaction price. That means when there is small changed amplitude of pattern occupancy ratio, there is a possibility that small fluctuation of transaction price will occur. And when there is a large changed amplify of pattern occupancy ratio, there is a possibility that large fluctuation of transaction price will occur. Also, we find the boundary value of changed amplify of pattern occupancy ratio which may lead to the relatively large fluctuation in transaction price. The finding contributes to provide reference information for the decision making of trading stock data. Additionally, we propose a new pattern-matching scheme called Visually and Practically Important Point (VPIP), which take the characteristic of the stock data into account. This scheme contributes that more valuable points can be remained in the stock time series after extracting the large number stock time series to small ones. Encouraging experiment is reported from the tests that there is an association between the bid sequence and transaction price time series of selected Chicago Stock Exchange, by using our pattern-matching scheme.