As seen in "Digits", the fourth episode of the Netflix series Connected, Benford's Law is applicable to almost every data set that is said to be randomly occurring such as the global financial markets. The law is most frequently used for surveillance and detection of fraud, money laundering, and manipulation of data.
Auditors world-wide have studied and are aware of the phenomenal application of this law and it's magic-like capability to detect accounting, legal, election, or scientific fraud.
Now, Benford's Law can be utilised by anyone and observed across any financial data-set. Apply this to prices, financial data, or health statistics on TradingView! Future releases of this indicator will be fully equipped with time-specific windows to apply Benford's Law and identify price manipulation.
Additionally, tick boxes are available in the settings window to see the data and view each leading digit!
Benford's Law
This is a classical use of the famous Benford's Law. Also called the "Law of Anomalous Numbers" , "First Digit Law", or the "First Digit Phenomenon", Newcomb–Benford law states that in many naturally occurring data sets, the leading digit is more likely to be a low number, despite probabilistic reasoning that each leading digit between 1 and 9 should be uniformly distributed at 11.1%.
For example, in data sets that obey the law, the leading number of 1 occurs approximately 30.1% of the time while the leading digit of 9 occurs only 5% of the time.
The mind-blowing distribution of Benford's Law is as follows.
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