Trading on Statistical Analysis

Discussion in 'Technical Analysis' started by ZebProctor, May 24, 2005.

  1. Hi, this is my first post here, but I've been lurking for quite some time. What I've been wondering about is if anyone trades by statistically analyzing historical data to look for a trend that give you a better than 50% chance of a price move.....

    for example, analyzing the last 4 months of upgrade stocks (or any list of stocks you might have) and plotting out that you invest x amount in a certain stock from that list each day, such as the stock with the highest average volume, or the stock with the lowest price, etc.

    So if someone were to find what they thought was a pattern, should they invest in this pattern?
  2. You've got years of learning ahead of you.

    Here's a good starting place:

    These guys have a very good commonsense method.

    One advice: trade minimum till you start making money. I wish I would've followed this advice, would've saved a truckload.

    But, to be a little more specific on your question.

    Yes, trading is always a numbers game.
    And, no, you don't throw your money away chasing your first idea. Try to understand why it works, if it works? Then, what will you do once you're in the trade: where's your stop, where's your exit? Test them too.
    Always a stop, an entry, an exit.

    Good luck.
  3. A little too late, been trading with the min. for a couple months now.... when I trade the statistical favorite, I usually enter in the morning, and exit at +8% or 3:30, whichever comes first. I hit the 8% about 1 or 2 days a week. My stop is -10%.

    What my problem is, when I can't short the stock, I go with another pick, and it's always the one day that week that the second favorite goes down.....

  4. Holy schnikie, just went to SF, what an awesome site!!!!
  5. Probability and conditional probability is the way to go! Esp. when you can work position sizing into it.