This workbook is used to show that coin tosses can generate charts that look very similar to

the types of charts that technical analysts use to forecast future stock price moves. You will
notice all of the same patterns as seen in normal stock (High Low Close) charts. This
includes support and resistance levels, trends, and all of the familiar patterns (head and
shoulders, triangles, etc). Just keep "flipping coins" until you see the patterns for which you
are looking.

There are two main worksheets. The "Simple Coin Toss" worksheet is based on nothing
more than simulated coin tosses. The "Coin Toss HLC" worksheet is based on more
complex logic (geometric Brownian motion), and generates a more typical chart.

Each time you click the "Flip Coins" button, 150 random coin tosses are generated. These
are shown as either Heads or Tails (though they are really 1's or 0's). For a Heads, the
closing price moves upward. If a Tails is thrown, the closing price moves down.

The exact closing price is determined by the average change and standard deviations
specified in the worksheet. Specifically, the change is a normally distributed random
variable with the mean and standard deviation specified. The high and low prices are based
on a random adjustment to the closing price. This adjustment is based on the same
average change and standard deciation as the closing price. Note that setting the standard
deviation to 0 will result in more of a "pure" coin toss metaphor. That is, the stock price will
always go up or down by exactly the average daily percentage change. Any other standard
deviation will result in a chart that looks more realistic and less mechanically generated.
Regardless, the chart is always random (well, as random as Excel's psuedo-random number
generator).

You can also run this simulation directly from the "Coin Toss Chart." Just switch to the chart
sheet and click the button in the upper-left corner.

Timothy R. Mayes, Ph.D

Associate Professor of Finance
Metropolitan State College of Denver
mayest@mscd.edu

http://www.tvmcalcs.com/
Up Move 0.25% Heads 76
Down Move 0.20% Tails 74
Begin Price 100

Coin Toss Price

100.00 Price
0 99.80
1 100.05
1 100.30 106.00
1 100.55 105.00
0 100.35 104.00
1 100.60 103.00
0 100.40 102.00
0 100.20 101.00
1 100.45 100.00
0 100.25 99.00
0 100.05 98.00
0 99.85 97.00
0 99.65 96.00
1 99.90
1 100.15
0 99.95
1 100.20
1 100.45 Chart as shown in original blog post
0 100.25
1 100.50 Price
1 100.75
1 101.00 106.00
0 100.80 105.00
0 100.60 104.00
1 100.85
1 101.10 103.00
1 101.35 102.00
1 101.61 101.00
0 101.40
100.00
0 101.20
1 101.45 99.00
1 101.71 98.00
1 101.96
97.00
1 102.22
1 102.47
0 102.27
1 102.52
1 102.78
1 103.03
1 103.29
0 103.09
0 102.88
0 102.67
0 102.47
0 102.26
0 102.06
1 102.31
1 102.57
1 102.83
0 102.62
1 102.88
0 102.67
0 102.47
0 102.26
0 102.06
1 102.31
0 102.11
1 102.36
1 102.62
0 102.41
0 102.21
0 102.00
1 102.26
0 102.05
1 102.31
0 102.10
1 102.36
0 102.16
0 101.95
1 102.21
1 102.46
0 102.26
1 102.51
1 102.77
0 102.56
1 102.82
1 103.08
1 103.33
1 103.59
1 103.85
0 103.64
1 103.90
0 103.69
1 103.95
0 103.75
0 103.54
0 103.33
1 103.59
0 103.38
1 103.64
1 103.90
0 103.69
1 103.95
0 103.74
0 103.54
1 103.80
1 104.05
1 104.31
1 104.58
1 104.84
0 104.63
0 104.42
0 104.21
1 104.47
1 104.73
1 104.99
0 104.78
0 104.57
0 104.36
0 104.16
0 103.95
0 103.74
1 104.00
1 104.26
1 104.52
0 104.31
0 104.10
1 104.36
1 104.62
1 104.88
0 104.67
0 104.47
1 104.73
0 104.52
0 104.31
0 104.10
0 103.89
0 103.68
1 103.94
0 103.73
1 103.99
0 103.79
1 104.05
0 103.84
0 103.63
0 103.42
0 103.22
0 103.01
0 102.80
0 102.60
1 102.85
1 103.11
1 103.37
1 103.63
1 103.89
1 104.15
1 104.41
0 104.20
1 104.46
0 104.25
st
Avg Change 0.04% Heads
StDev 0.80% Tails
Begin Price 100

Toss Result High Low Close

100.28 99.44 100.00
Tails 100.13 99.47 99.66 110.00
Tails 99.11 98.91 98.91
Heads 99.17 99.07 99.09
Heads 99.84 98.47 99.71
105.00
Heads 100.66 99.79 99.82
Heads 101.63 100.18 100.30
Tails 100.22 99.96 100.01
Heads 101.68 100.86 100.91 100.00
Tails 99.96 99.83 99.96
Heads 100.59 99.98 100.22
Heads 101.30 99.96 101.06
95.00
Tails 100.34 99.19 100.33
Heads 102.06 100.59 100.89
Heads 101.19 100.92 100.94
Tails 101.40 100.13 100.29 90.00
Tails 100.10 99.04 99.49
Heads 100.17 99.59 99.66
Tails 99.91 98.40 99.45
Heads 100.88 99.90 100.68
Tails 101.04 100.13 100.23
Heads 101.17 100.51 100.66
Heads 100.91 99.92 100.89
Heads 102.44 100.59 101.66 Go to blog post
Tails 101.60 101.10 101.38
Tails 101.65 100.21 100.60
Heads 101.43 100.80 101.33
Heads 102.12 101.96 102.01
Heads 102.61 101.70 102.05
Tails 102.22 101.27 102.03
Heads 102.73 102.53 102.72
Tails 102.73 102.07 102.71
Heads 104.63 103.23 103.35
Tails 102.12 101.59 102.09
Tails 101.14 100.73 101.02
Tails 100.96 100.00 100.91
Heads 101.67 100.65 101.62
Tails 101.56 101.16 101.43
Heads 102.08 100.98 101.84
Heads 103.16 101.31 102.05
Heads 103.41 101.67 102.24
Heads 103.61 103.25 103.30
Heads 103.57 102.88 103.55
Tails 102.97 101.99 102.81
Heads 103.66 103.02 103.19
Heads 103.43 103.15 103.36
Heads 105.42 103.03 104.32
Tails 104.76 103.49 103.95
Tails 102.92 102.37 102.82
Heads 103.10 102.71 102.95
Tails 103.42 101.65 102.43
Tails 102.83 101.48 101.76
Tails 101.89 100.81 101.60
Heads 102.88 101.74 102.49
Heads 103.09 101.87 102.56
Heads 102.86 102.78 102.82
Heads 103.76 103.39 103.41
Tails 104.07 102.60 103.30
Heads 104.08 103.88 103.89
Heads 104.93 103.63 104.28
Tails 103.69 102.31 103.57
Heads 104.58 103.00 104.08
Heads 104.60 104.18 104.30
Heads 105.34 103.67 104.40
Heads 105.66 104.48 104.67
Heads 105.47 104.77 105.19
Tails 105.90 104.80 105.02
Heads 107.04 106.07 106.28
Heads 107.52 105.82 106.92
Tails 106.62 106.31 106.57
Tails 107.20 105.76 106.51
Tails 106.81 105.57 105.97
Tails 105.46 105.11 105.28
Tails 105.34 104.15 105.12
Heads 106.93 105.26 105.62
Heads 107.13 105.49 106.65
Heads 107.26 106.66 106.80
Tails 106.84 106.07 106.60
Tails 106.73 105.23 105.92
Heads 107.18 106.72 106.88
Tails 107.71 105.95 106.88
Tails 106.85 106.00 106.07
Tails 106.14 105.17 105.44
Heads 105.54 104.90 105.50
Heads 105.82 105.70 105.81
Tails 105.28 103.97 104.57
Tails 103.82 103.41 103.80
Tails 104.27 102.91 103.62
Heads 104.99 103.21 103.72
Heads 105.00 103.70 103.92
Tails 103.96 103.75 103.85
Heads 104.88 103.89 104.15
Tails 103.10 102.40 102.92
Tails 102.93 102.35 102.52
Tails 101.60 100.18 101.39
Heads 102.16 101.35 101.97
Heads 103.28 101.89 102.23
Tails 102.09 101.78 101.84
Heads 103.30 102.05 102.57
Tails 102.02 100.99 101.65
Tails 101.71 101.40 101.55
Heads 103.34 101.91 102.39
Tails 101.52 100.18 101.16
Heads 103.09 101.84 101.98
Tails 101.87 101.55 101.74
Tails 101.28 100.14 100.78
Heads 102.44 100.85 101.77
Tails 101.45 101.29 101.29
Heads 102.62 100.96 101.73
Heads 102.66 101.98 102.59
Tails 101.91 101.58 101.64
Tails 102.20 101.33 101.62
Heads 102.02 100.73 101.92
Heads 102.98 101.64 102.39
Tails 102.68 102.12 102.30
Tails 102.24 101.45 101.55
Heads 103.24 102.54 102.74
Heads 103.85 103.56 103.63
Tails 103.58 103.18 103.48
Heads 104.01 102.52 103.75
Heads 104.47 103.55 103.95
Tails 103.79 102.48 103.62
Tails 104.85 103.02 103.61
Tails 103.62 102.74 103.00
Heads 104.65 103.92 104.31
Tails 104.27 103.46 104.21
Tails 103.73 102.27 103.20
Tails 103.33 102.56 102.66
Tails 102.48 101.47 102.32
Tails 102.29 100.59 101.81
Heads 102.97 101.15 101.97
Tails 100.89 100.52 100.76
Tails 100.55 99.41 100.36
Tails 100.07 98.47 99.44
Tails 99.65 98.29 98.76
Tails 98.46 98.04 98.46
Heads 100.06 98.46 99.31
Heads 100.05 98.53 99.45
Tails 99.04 98.96 98.98
Tails 99.09 98.52 98.81
Tails 99.83 98.22 98.68
Tails 98.95 98.14 98.23
Tails 97.78 96.89 97.61
Tails 97.18 95.95 97.09
Heads 97.27 96.24 97.09
 Tails 96.54 96.34 96.48
Heads 97.13 96.60 96.85
Heads 98.15 96.81 96.99
Heads 97.81 97.12 97.43
Heads 98.51 97.43 97.44
Tails 96.86 95.74 96.31
74
76
110.00

105.00

100.00

95.00

90.00
This workbook is Copyright 2008 by Timothy R. Mayes, Ph.D.

Please visit: http://www.tvmcalcs.com/

You are free to use and redistribute it as long as this notice is kep intact.
However, I retain all rights to the worksheet.