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Howe's Limit Rule from Moore web page: http://www.mrci.com/howe.htm
"Moore Research Center, Inc. has statistically evaluated limits
traded, exceeded, and hanging in certain markets in which daily
trading limits remain established. That analysis implies the key
historical significance of the first and third days immediately
following a trade at a limit price. In a majority of those markets, as
one might expect, a limit-traded price has been exceeded on the first
day following 50-70% of the time. In almost all markets studied, the
analysis suggests the historical probability of exceeding a limit
price is often greater than 80% within 3 trading days, and 90% within
7 trading days."
Bob Hunt
THE PATTERN TRAPPER
E-Mail: RHunt.066@xxxxxxxxxxxxxxxx
Web Site: http://home.att.net/~rhunt.066
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Gary Fritz wrote:
>
> Has anyone ever done a study to see what the market typically does
> when trading collars kick in? I.e. what percentage of the time does
> the market reverse, or bounce and then head down again, or sit at the
> limit until the collars go off & then plunge again?
>
> I almost overrode my system and exited a very nice short position
> when the ND hit its limit at 11:30 ET this morning. But the NDX was
> still heading down, so I decided to follow the system and sit tight.
> Ooops. :-( It would be nice to have some statistical guidance in
> the future.
>
> Of course, the statistical guidance will probably be "it does each
> one about 1/3 of the time"... :-)
>
> Thanks,
> Gary
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