Implied trinomial tree

An implied trinomial tree is a type of model that traders (people who buy and sell investments) can use to predict movements in certain markets, such as stocks, bonds, and currencies. The model works by splitting each moment in time into three possible future outcomes (a trinomial tree). The model then looks at the prices of the investments at each of those moments, and uses that information to calculate the probability of each outcome. For example, if a stock is currently trading at a certain price, then the model might predict that it has a 60% chance of moving lower in the next few days, a 30% chance of remaining unchanged, and a 10% chance of rising. By using this model, traders can make more informed decisions about their investments.