3 ms·
Stock prices have discrete changes, though, in the form of individual transactions. Zoom in far enough that your graph is entirely occupied by the time between
by manfredo 6y ago
Stock prices have discrete changes, though, in the form of individual transactions. Zoom in far enough that your graph is entirely occupied by the time between two transactions and you have a straight line.
- jlawson 6y agoBut you don't really have a straight line. You have an instantaneous step change. Of course, when you're zoomed in that much the concept of 'price' becomes a lot more complex. You need to distinguish between bid, ask, and last transaction price. So the whole mental model kind of falls apart.
- littlestymaar 6y agoBut it's modeled as a continuous function of time, because then you can use calculus on it. We do the same all the time in physics too: since quantum mechanics became a thing, we know that at a microscopic level, many things are discrete and not continuous (energy levels for instance), yet macroscopic physics use continues function to model it, because we have powerful tool we can use on them (and derivation is one of those).