thinking thursday, page-46

I have started taking a more or less statistical approach lately. I use two sets of bollinger bands inside each other. One the normal set and one using one std deviation rather than the normal two.

What this does is break the price range into what statisticians would call quartiles. If something is random - the good old bell shaped curve it will spend 50% of its time in the middle two quartiles with occasional jumps into the extremes.

When something trends it jumps into the lower or upper quartile and stays there more or less with occasional moves back to the middle.

Today what we have would from a statistical view be an essentially perfectly random day with std deviation of about 5 points.

In other words the absolute best you are going to get from one side of the bell shaped curve to the other is 20 points - 4 quartiles.

more likely you will get something in the middle 2 quartiles which is 2 x std deviations or 10 points,

Stating the obvious - ain't hindsight great - and statistics is great in hindsight - you could try playing XJO wack-a-mole if you like - but there is always going to be the risk of a 10 point swing against you - guaranteed to wipe out your stops unless you have a higher risk tolerance than I have.