View source for Illerai:Grand Exchange Market Watch/FAQ

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==What is the Grand Exchange Market Watch?==

The [[Grand Exchange Market Watch]] is a project set up to monitor and record the prices and other information on items on the [[Grand Exchange]].

==Who created this project?==

This project was thought up and originally coded by Robert Horning. Many other people over the years since it was created have been involved in "tweaking" the organization of this project and have contributed a huge amount of information to make everything work and to keep the information up to date.

==How do I update prices?==

Usually, users do not need to manually update the [[Grand Exchange Market Watch]] as bots keep it up to date. However, the bots require several hours before all prices can be updated. 

===List of bots===

Below is the list of bots currently involved in the project (as of February 2013): 

* [[User:Gaz GEBot]] - fully automated price updating (primary)


==What is an index?==

An index is a method of measuring the value of a section of the market. It is computed from the prices of selected items. In a price-weighted index such as the [[wikipedia:Dow Jones Industrial Average|Dow Jones Industrial Average]] (DJIA), the price of each component item is the only consideration when determining the value of the index. Items may be removed or added to indices over time, but the index will remain "neutral" when that happens, following the method that the Wall Street Journal uses when the DJIA is adjusted (see [[#How is an index calculated?|below]]).

The [[RuneScape:Grand Exchange Market Watch/Common Trade Index|Common Trade Index]] (CTI) is one of the indices calculated from the [[Grand Exchange Market Watch]]. The CTI shows the health of the RuneScape [[economy]] in general. The CTI is worked out using a list of items which are traded very often. There are also other indices such as the Discontinued Rare, Rune, Log, Food, Metal, Herb and Indices, all of which show the health of that aspect of the RuneScape economy and work in the same way as the Common Trade Index.

The Common Trade Index is displayed as 2 numbers. The first is the index number. This shows the comparative prices of all the items on the list compared to their price on the base date. A value above 100 means that in general the prices have risen and consequently that the RuneScape economy is doing quite well, while a value below 100 means that overall prices have dropped.

Next to that number is index change number accompanied by an arrow, either red or green. This shows whether the index has gone up or down since it was last calculated, a negative number and a red arrow indicate that the index has dropped as prices have generally fallen, while a positive number shows that the prices have generally risen.

===List of indices===

{| class="wikitable"
! Index
! Current
! Change
! Base date
! Last adjustment date
! Number of items
! Index divisor
|-
| [[RuneScape:Grand Exchange Market Watch/Common Trade Index|Common Trade Index]]
| {{GE Common Trade Index}}
| {{GE Common Trade Index/Change}}
| 13 June 2020
| 13 June 2020
| 28
| 28.0000
|-
| [[RuneScape:Grand Exchange Market Watch/Rune Index|Rune Index]]
| {{GE Rune Index}}
| {{GE Rune Index/Change}}
| 13 June 2020
| 13 June 2020
| 21
| 21.0000
|-
| [[RuneScape:Grand Exchange Market Watch/Log Index|Log Index]]
| {{GE Log Index}}
| {{GE Log Index/Change}}
| 13 June 2020
| 13 June 2020
| 11
| 11.0000
|-
| [[RuneScape:Grand Exchange Market Watch/Food Index|Food Index]]
| {{GE Food Index}}
| {{GE Food Index/Change}}
| 13 June 2020
| 13 June 2020
| 16
| 16.0000
|-
| [[RuneScape:Grand Exchange Market Watch/Metal Index|Metal Index]]
| {{GE Metal Index}}
| {{GE Metal Index/Change}}
| 13 June 2020
| 13 June 2020
| 17
| 17.0000
|-
| [[RuneScape:Grand Exchange Market Watch/Herb Index|Herb Index]]
| {{GE Herb Index}}
| {{GE Herb Index/Change}}
| 13 June 2020
| 13 June 2020
| 28
| 28.0000
|}

==How is an index calculated?==

The index is calculated by summing the sum of price ratios (current price of items divided by their prices on the base date), multiplying by 100, and dividing with the "index divisor".

:<math>\begin{align}

  \text{index} & = \sum_{i=1}^{n} \left ( \frac{p_i}{q_i} \right ) \times \frac{100}{{div}_{\text{index}}} \\

    & = \left ( \frac{p_1}{q_1} + \frac{p_2}{q_2} + \dots + \frac{p_n}{q_n} \right ) \times \frac{100}{{div}_{\text{index}}}

  \end{align}</math>


:<math>\begin{align}

  \text{where:} \qquad \qquad               p & = \text{current price} \\
                                            q & = \text{base price} \\
                                            n & = \text{number of items} \\
            \sum \left ( \frac{p}{q} \right ) & = \text{sum of price ratios} \\
                         {div}_{\text{index}} & = \text{index divisor}

  \end{align}</math>


For example, let us assume the index is composed of four fictional items (A=30, B=40, C=70, D=60). At the point of the creation of the index, the index would equal to 100, and the index divisor, would be equal to the number of items included in the index.

:<math>\begin{align}

  \text{index} & = \sum_{i=1}^{n} \left ( \frac{p_i}{q_i} \right ) \times \frac{100}{{div}_{\text{index}}} 

    \qquad \text{for }{A, B, C}\text{ and }{D} \\

    & = \left ( \frac{p_1}{q_1} + \frac{p_2}{q_2} + \dots + \frac{p_n}{q_n} \right ) \times \frac{100}{n} \\

    & = \left ( \frac{30}{30} + \frac{40}{40} + \frac{70}{70} + \frac{60}{60} \right ) \times \frac{100}{4} \\

    & = 100

  \end{align}</math>


After several months, the prices of the four items would have changed (A=22, B=31, C=85, D=64). When the index is re-calculated, the index is down to 94.73 by 5.27 points. As long as the items themselves are not changed (via addition and/or removal), the index divisor remains equal to the number of items.

:<math>\begin{align}

  \qquad \qquad \qquad \qquad \text{index} & = \sum_{i=1}^{n} \left ( \frac{p_i}{q_i} \right ) \times \frac{100}{{div}_{\text{index}}}

    \qquad \text{for }{A, B, C}\text{ and }{D} \\

    & = \left ( \frac{22}{30} + \frac{31}{40} + \frac{85}{70} + \frac{64}{60} \right ) \times \frac{100}{4} \\

    & = 94.73

  \end{align}</math>


==What happens when index items need to be changed?==

When old items are removed and/or new items are added to the index, the index is adjusted accordingly. The index divisor needs to be re-calculated and is no longer equal to the total number of items. While the value of the index remains the same at the moment of the removal and/or addition, the index divisor is different. 

:<math>\begin{align}

  \text{since:} \qquad \qquad \qquad \qquad
  
  \text{index}_{\text{adj}} & = \text{index}_{\text{old}} \\

  \sum \left ( \frac{p}{q} \right )_{\text{adj}} \times \frac{\cancel{100}}{{div}_{\text{adj}}} & = \sum \left ( \frac{p}{q} \right )_{\text{old}} \times \frac{\cancel{100}}{{div}_{\text{old}}} \\

  \frac{\sum \left ( \frac{p}{q} \right )_{\text{adj}}}{{div}_{\text{adj}}} & = \frac{\sum \left ( \frac{p}{q} \right )_{\text{old}}}{{div}_{\text{old}}} \\

  \end{align}</math>


:<math>\text{thus:}</math>

:<math>{div}_{\text{adj}} = {div}_{\text{old}} \times \frac{\sum \left ( \frac{p}{q} \right )_{\text{adj}}}{\sum \left ( \frac{p}{q} \right )_{\text{old}}}</math>


:<math>\text{where:}</math>


:<math>\begin{align}

    {div}_{\text{old}} & = \text{index divisor prior to adjustment} \\

    {div}_{\text{adj}} & = \text{index divisor after adjustment} \\

    \sum \left ( \frac{p}{q} \right )_{\text{old}} & = \text{sum of price ratios prior to adjustment} \\

    \sum \left ( \frac{p}{q} \right )_{\text{adj}} & = \text{sum of price ratios after adjustment} \\

      & = \text{sum of price ratios prior to adjustment} \\

      & \quad - \text{sum of removed ratios} + \text{sum of added ratios} \\

      & = \sum \left ( \frac{p}{q} \right )_{\text{old}} - \sum \left ( \frac{p}{q} \right )_{\text{removed}} + \text{number of added items} \\

  \end{align}</math>


From the earlier example of the fictional index with four items (see [[#How is an index calculated?|above]]), Item B will be removed, and new items E and F are added (E=120, F=354).

:<math>{div}_{\text{old}} = 4</math>

:<math>\sum \left ( \frac{p}{q} \right )_{\text{old}} = \left ( \frac{22}{30} + \frac{31}{40} + \frac{85}{70} + \frac{64}{60} \right )  = 3.78928571 \qquad \left ( \text{for }{A, B, C}\text{ and }{D} \right )</math>

:<math>\sum \left ( \frac{p}{q} \right )_{\text{adj}} =  3.78928571 - \left ( \frac{31}{40} \right ) + 2 = 5.01428571 \qquad \left ( \text{for }{A, C, D, E}\text{ and }{F} \right )</math>

:<math>{div}_{\text{adj}} = 4 \times \frac{5.01428571}{3.78928571} = 5.2931</math>


To check if our calculations are correct, we need to check the "adjusted" index using the "adjusted" index divisor.

:<math>\text{index}_{\text{old}} = 94.73</math>

:<math>\text{index}_{\text{adj}} = \left ( \frac{22}{30} + \frac{85}{70} + \frac{64}{60} + \frac{120}{120} + \frac{354}{354} \right ) \times \frac{100}{5.2931} = 94.73</math>

==See also==
*[[Template:GE Common Trade Index]], for the template used to calculate the CTI

[[RuneScape:Grand Exchange Market Watch]]
[[Category:Grand Exchange]]