Forex A Simple Approach to Market Statistics

I have noticed a lot of people in here fighting trends... A lot of people don't have the slightest grasp of the statistics of market movement. I decided to share with you this simple way of analyzing probability. I don't actually use this when trading so it won't hurt me to share it. However, I do use it to review the overall situation.

First, let me give you cheat-sheets for compounding probabilities. A "OR" compound allows you to compound the estimated probability of an event like Mean Return. A "AND" compound allows you to estimate the compound the probability of two separate events like price testing a half ATR under mean and a half ATR above mean in the same candle.

Here are the Cheatsheets, next post is the first lesson.

Probability || Compounds
90% Probability 2xOR Compound = 99%
80% Probability 2xOR Compound = 96%
70% Probability 2xOR Compound = 91%
60% Probability 2xOR Compound = 84%
50% Probability 2xOR Compound = 75%
40% Probability 2xOR Compound = 64%
30% Probability 2xOR Compound = 51%
20% Probability 2xOR Compound = 36%
10% Probability 2xOR Compound = 19%

90% Probability 3xOR Compound = 99.9%
80% Probability 3xOR Compound = 99.2%
70% Probability 3xOR Compound = 97.3%
60% Probability 3xOR Compound = 93.6%
50% Probability 3xOR Compound = 87.5%
40% Probability 3xOR Compound = 78.4%
30% Probability 3xOR Compound = 65.7%
20% Probability 3xOR Compound = 44.8%
10% Probability 3xOR Compound = 27.1%

90% Probability 4xOR Compound = 99.99%
80% Probability 4xOR Compound = 99.84%
70% Probability 4xOR Compound = 99.19%
60% Probability 4xOR Compound = 97.44%
50% Probability 4xOR Compound = 93.75%
40% Probability 4xOR Compound = 87.04%
30% Probability 4xOR Compound = 75.99%
20% Probability 4xOR Compound = 59.04%
10% Probability 4xOR Compound = 34.39%

90% Probability 5xOR Compound = 99.999%
80% Probability 5xOR Compound = 99.968%
70% Probability 5xOR Compound = 99.757%
60% Probability 5xOR Compound = 98.976%
50% Probability 5xOR Compound = 96.875%
40% Probability 5xOR Compound = 92.224%
30% Probability 5xOR Compound = 83.193%
20% Probability 5xOR Compound = 67.232%
10% Probability 5xOR Compound = 40.951%

Probability && Compounds
90% Probability 2xAND Compound = 81%
90% Probability 3xAND Compound = 72.9%
90% Probability 4xAND Compound = 65.61%
90% Probability 5xAND Compound = 59.049%

80% Probability 2xAND Compound = 64%
80% Probability 3xAND Compound = 51.2%
80% Probability 4xAND Compound = 40.96%
80% Probability 5xAND Compound = 32.768%

70% Probability 2xAND Compound = 49%
70% Probability 3xAND Compound = 34.3%
70% Probability 4xAND Compound = 24.01%
70% Probability 5xAND Compound = 16.807%

60% Probability 2xAND Compound = 36%
60% Probability 3xAND Compound = 21.6%
60% Probability 4xAND Compound = 12.96%
60% Probability 5xAND Compound = 7.776%

50% Probability 2xAND Compound = 25%
50% Probability 3xAND Compound = 12.5%
50% Probability 4xAND Compound = 6.25%
50% Probability 5xAND Compound = 3.125%

Source.

 

In FX, the financial specialist cannot endeavor to buy on the bid or sell at the idea just like the case in exchange-based markets. Then again, when the price frees the expense from the spread, there are no extra charges or commissions. Each and every penny picked up is pure benefit to the financial specialist. By and by, the way that traders should consistently defeat the bid/ask spread makes scalping significantly more troublesome in FX.