Market will only close in one of 3 ways: up, down or flat. You can only guess on each day that the market will be one of these three options. Probablility that on one day you will guess the right market close= 1/3=.333. Take that to the power of 10, .333^10 and you get .0000169. These are the odds on guessing 10 purely-directional market closes in a row.
Odds of predicting market direction
- Thread starter runningman
- Start date
The odds of a flat finish are not 1/3.
The catch here is that the odds of the market ending up exactly flat are very low. I think for all intents and purposes we can assume the market will end either up or down.
Out of curiosity, does anyone know where to find data that would show how many exactly flat days there have been historically?
These are generalized odds, obviously. If you want to compile the exact stats on % chances for up days, down days and flat days for all stocks and indices since day T1 and report back to us, be my guest.
That being said, there are only 3 possibilities for closing prices on any given day (up, down, flat), and there can only be one specific outcome per trading day (1]up, or 2]down, or 3]flat) not 2 or 3 outcomes per day. Hence, generalized odds of guessing the correct close of a trading day if one picks from the 3 possibilities = 1/3.
The requirement is to know about the next trading day, not the next 10 or 20 days ahead.
For an individual player, all you are dealing with, is taking the most you can take from a days trading. You are therefore going to take the most points you can from the days gyrations. Your requirement is a liquid and volatile daily market which ratchets up a lot points, open to close. Witness the points CL and NG offer most days.
You can have many templates and the day ahead will sit in one of them, which is because it is subject to certain parameters you set up and the template it therefore sits in, arises out of and is sorted from the datasets you keep of the gyrations of the markets you are trading (eg 3 to 6 year datasets of the daily gyrations of the markets you are trading). As a result you will know the pattern of the day ahead when official trading starts at the open.
This is a professional perspective for utilizing the metrics of the market.
For an individual player, all you are dealing with, is taking the most you can take from a days trading. You are therefore going to take the most points you can from the days gyrations. Your requirement is a liquid and volatile daily market which ratchets up a lot points, open to close. Witness the points CL and NG offer most days.
You can have many templates and the day ahead will sit in one of them, which is because it is subject to certain parameters you set up and the template it therefore sits in, arises out of and is sorted from the datasets you keep of the gyrations of the markets you are trading (eg 3 to 6 year datasets of the daily gyrations of the markets you are trading). As a result you will know the pattern of the day ahead when official trading starts at the open.
This is a professional perspective for utilizing the metrics of the market.
Indeed, about as rare as the coin landing on its edge when flipped.
+1Quote from Cheese:
The requirement is to know about the next trading day, not the next 10 or 20 days ahead.
For an individual player, all you are dealing with, is taking the most you can take from a days trading. You are therefore going to take the most points you can from the days gyrations. Your requirement is a liquid and volatile daily market which ratchets up a lot points, open to close. Witness the points CL and NG offer most days.
You can have many templates and the day ahead will sit in one of them, which is because it is subject to certain parameters you set up and the template it therefore sits in, arises out of and is sorted from the datasets you keep of the gyrations of the markets you are trading (eg 3 to 6 year datasets of the daily gyrations of the markets you are trading). As a result you will know the pattern of the day ahead when official trading starts at the open.
This is a professional perspective for utilizing the metrics of the market.