Probability and Trading

Discussion in 'Technical Analysis' started by sridhga, May 11, 2022.

  1. sridhga


    In 10 tosses the likelihood of seeing two consecutive heads within them is 0.86.
    #51     May 13, 2022
    Gazillionaire likes this.
  2. Ok, the formula refers to some fibo no.
    P(n,2) = Fibo n+2 / 2^n
    For 5 tosses, what no. do you plug in for fibo no. for p(5,2)?
    i.e. what no. is fibo(7th)

    There seems to be an error in the example for p(10,2).
    In the denominator, how can 2^10 = 64?
    Last edited: May 13, 2022
    #52     May 13, 2022
  3. sridhga


    A friend of mine pointed out just now. Silver is within 1% striking distance from 52 week low. It has been falling for the last one month. What is the probability that it tests the low?

    The answer need not be calculated. Of course it can be derived using daily ranges, but that is not the purpose for a trader. I can say the probability is above 0.5 I have put in a short trade in silver before I typed this.
    #53     May 13, 2022
  4. SunTrader


    #54     May 13, 2022
  5. Yes, it is above 0.5. But that isn't the reason for entering the trade. There are lots of assets near some arbitrary price (52 week low, high, VWAP, whatever) that have a 0.5 or greater chance of passing that arbitrary point. But you will find that entering trades for this reason doesn't create gains on average.
    #55     May 13, 2022
    sridhga likes this.
  6. spooz


    Setting a target is very difficult, again my answer would be“it all depends”. A very common method I use is to go long after a pullback and get out when the market makes a new high. Short trades are just the opposite of course. When you have exited the market at the new high watch out for the possibility of a short trade. The market we have now gives you the opportunity to pick a target from a longer time frame in my case 15 minutes. Whether you are long or short put yourself on the other side of the trade. Where would you want to enter the market in the opposite direction? That's where you put your target. Be realistic don't, put the target at some distant point that you wish the market would go to but probably wont. You need several hundred hours of watching your market, then you should have some idea of how it will behave.

    I gather that you are following a pattern that you saw in a book. From what I surmise it's very precise with exact instructions. That's fine you have to start somewhere. At least you haven't got sucked into the dead end of indicators etc. I think you are on the right path. You will most likely find the pattern you are looking at is too restrictive and may have to broaden it's scope. It will be a many step process.
    #56     May 13, 2022
    MACD and sridhga like this.
  7. Hello sridhga,

    I do not know.

    Thank you,
    #57     May 13, 2022
  8. %%
    [a]WELL, i checked out a lot forests rather than a few trees. Then got in....
    b]Could have used any business, but that other elite trader compared it to the same forest, so i'll build off that.
    bc] Both can/\ be a tough business.
    d] commercial loggers want a certain size/\ even though it varies
    e]trees dont grow to the moon but that's the current direction for SPY today as of 11;47
    f] Fun to watch 'em knock\cut them down; i like to plant apple trees also.
    You probably know more about loggin' than me.
    [g]WHEN it got real rainy we agreed no logging deep ruts on my place. So usually tends to pay to plan.....
    #58     May 13, 2022
    KCalhoun likes this.
  9. Thanks!
    #59     May 14, 2022