direct statistical trading a "clearly" defined approach by NTW31

yes sir..

ill post some graphs to get to the base of it tho. because understanding it is important as well.

in the graph i posted here we see in the key 1-10.. this is the number of bars in order as posted awhile back

the majority in the market 54% the blue area... as more bars occur consecutively the odds of them occurring is less and less.

Statistically tho we know this will form like this and this graph isnt our goal at finding the edge for this system. but does help us with a basis for the next step.

 

now in this graph we make the assumption that the first bar is formed in one direction and the next bar is forming what is its chances to form in the same direction or not in the same direction from open to close.

this bar graph is better to see the % so ill do the rest like this...

notice how the chance actually change after the first bar occurs now the chance that just two bars will form is 56%

 

now look at the next one this is two bars formed in same direction third is forming their is a 60% it will form in the same direction. as the first 2 bars.

 

now look at this one and we drop here from 60 to 59%

 

then 56%

 

then all of a sudden a 70% chance to be in same direction!!!!!!

 

then 88%

 

so where is the raw edge??? is there one or is it distorted?

 

let look at it this way. one bar in one direction the next a new direction chance of the third.

chance

red-green-?(red)=67%
red-green-?(green)=33%

 

chance red-green-green-?(red)=68%
chance red-green-green-?(green)=31%