clearly, this is being fooled by randomness for the other guy who questions whether i took the trades, http://www.elitetrader.com/vb/showthread.php?threadid=63802
We are facing a pattern that in the last 400 days always went down. For 8 times. 400 days is somewhat the population and not a sample. You cannot infer in financial markets using normal distribution. If so (read Mandelbrot) October 1987 never should have occurred. If instead of 8 patterns all bearish they were 4, we had 50% probabilities that today it will go down. In this context, obviously. Good trading.
If I understand right, I used normal distribution in my reasoning and Mandelbrot is the king of fat tails...it says it all.
Just to clarify, this was not directed at you. I have not had time to look and see if you have been posting in realtme.
Please do not use normal distribution. Fat tails are a reality. We are in finance from 1965 and in our experience, when using normal distribution, problems were on the corner. Our approaches now tend to use shorter and shorter periods where an instrument should go up if it is 'in debt' of bull days and so on. Moreover: possibly do not go overnight, enter the market half an hour after opening and exit the market half an hour before the end. This is what we think. We think that a Forum is a place where everyone offers some idea, perhaps not correct, obviously.
OK, I say it clearly : YOU HAVE NOT A CLUE IN BASIC STATISTICS. Please stop using words you don't even understand, even 'normal distribution'.
October 1987 and about twenty other situations are not comtemplated by Normal Gaussian Distribution: they are completely out and unforecastable. Nevertheless, shall we use a model that is incongruent with the happening? Why? Please explain.
Where did I use normal distribution in my reasoning ? What you said in your first post is exactly the same as if I say the following : "Everytime today's temperature is over yesterday's temperature, I have eaten pasta for lunch, I got up at 7AM and did not have a shag before leaving to work, then market is going down with a 99.5% certainty." However, I won't loose my day trying to explain basic probs and stats to you. Answers from others in this thread do confirm what I told you.