# How to Use a Derivative Formula

by Stephanie Ellen

A derivative is a term used in calculus to show how a function changes as the function's input changes. The derivative formula can be applied to show a financial analyst how stocks are performing on the stock market today compared with years ago. A financial analyst can also use derivatives to predict where stocks are headed. While calculating a derivative formula is a complicated process, if you already have the formula, using it involves little more than a good calculator.

1. Type the formula into the graphing calculator. While there are many graphing calculators on the market, most will have a "Y=" button where you can enter the formula.

2. Press the "Graph" button or key.

3. Analyze the graph. For example, a stock on a parabolic trajectory up or down will have a linear first derivative. In other words, the graph will resemble a line. A positive first derivative generally indicates that prices are moving up, while a negative first derivative indicates that prices are moving down.

#### Tips

• If you don't have a graphing calculator, there are many free graphing calculators available online.
• If your graph oscillates erratically, try extending the time period you are analyzing.

#### Warning

• While it's possible to analyze historical data with accuracy, it's impossible to predict with certainty how stocks will perform in the future.

### Items you will need

• Derivative formula
• Graphing calculator or computer algebra software

#### About the Author

Stephanie Ellen teaches mathematics and statistics at the university and college level. She coauthored a statistics textbook published by Houghton-Mifflin. She has been writing professionally since 2008. Ellen holds a Bachelor of Science in health science from State University New York, a master's degree in math education from Jacksonville University and a Master of Arts in creative writing from National University.

#### Photo Credits

• Hemera Technologies/Photos.com/Getty Images