Answer to Question #27145 in Statistics and Probability for Taun Kijlstra

Question

Assuming a Stock's price changes in a random manner. If you buy this Stock, you are required to set a stop-return and stop-loss price. I alooking for the equation that shows the probability for each day since you buy the Stock (Buy Date), of crossing the stop-return and stop-loss price. In other words; I want the formula that allows me to chart a line showing the probability the Stock price crossing any stop-loss (on way down) or stop-return on way up.

The stop-loss price can be any price below the Buy price.
The stop-return price can be any price higher than the Buy price.
Known Information: 1. The Buy Price. 2. The Standard Deviation (or Historical Volatility) of the Price on the date you bought the Stock.

For example, on the x-axis of the chart it displays each day starting with the Buy Date. There are2 lines. One line shows the probablity of the random price crosses the stop-loss price going down for each day. The other line shows the same fo the stop-return.