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> So just for fun, I
> just chose 4 dates in the last 4 weeks - april 23, may 1, 7, 17 and
> then chose a commodity TY M1. I placed the stars on the dates - pretty
> impressive!
Yep. At the risk of getting in trouble again for trying to inject a
little logic into an emotional topic, let's think about it a little. The
key is that +/- 2 days. Usually, I've seen trading days used for that,
so that's 5 trading days total, or a week, or a quarter of a lunar
cycle. If we look at all 4 phases of the moon, we've covered the whole
month. If we only look at one phase, such as the new moon, that focuses
it tighter but, if we are willing to accept several different events as
significant, it still can hardly miss. Bear with me here....
New moon +/- 2 trading days (25% of the month covered)
25% chance of a high during the period by random chance
25% chance of a low during the period by random chance
-------------------
50% chance of a high or a low by random chance within +/- 2 days
Now, if we can find 2 more conditions we consider significant, say a
"continuation" and [I don't know what else], we have a 100% chance of
"something" happening within +/- 2 days of the new moon.
Just to be clear, I'm not claiming there is nothing to the moon effect
or the planet effect or the sunspot effect. It's just that we need to be
careful how we test it or we can fall into a statistical "can't miss"
trap that reinforces what we already want to believe.
Eyeballing the chart for correlations is particularly deceptive. System
traders learn early on that the eye is easily fooled. Plot your favorite
system as an indicator and your attention focuses in on the "good"
events and totally misses many of the "bad" events. You will swear the
system is nearly perfect. It's only when you run the statistics that you
find all those times it didn't work as expected.
--
Dennis
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