Does anyone know how to apply standard deviations to get support and resistance #'s for stocks and/or futures? And what the SIMPLE formula is? I know they mean something like theres a 66% chance of this number holding on 1 S.D. and a 97% chance on 2 S.D. etc... Any help or insight would be greatly appreciated.
This site has a basic introduction to the concept of a normal distribution. http://www.ruf.rice.edu/~lane/hyperstat/normal_distribution.html This site has a "z table" calculator, where you enter the number of deviations from the mean, and it gives you the area (percentage) under the curve. http://davidmlane.com/hyperstat/z_table.html As far as support and resistance goes, you might want to try Bollinger bands. Many traders use them, including quite a few on this board. A standard setting of 20,2 for BB would have a basis line that is the 20 period simple moving average. The outer lines would be +/- 2 standard deviations from this line. More info about BB here: http://www.equis.com/free/taaz/bollinger.html -v