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I thank Mr. Baker for his explanation of how probabilities are arrived at.
In this case the ratio is 3/1. As for support and resistance. The words
are self explanatory. They do not say top or bottom. With support/
resistance areas price is expected to stop there temporarily and one should
exit a trade at that point and wait for their system to tell them it is time
to re enter a trade. Whether it be trend or contra trend. Support levels
are supposed to be bounced off of as are resistance levels. No one said
that either is the end of a move. My system provides and entry price and 2
support/resistance price levels and a target. All I expect at each level is
a retracment in price and the ability to re enter a trade once another entry
price is given. Many times the trade is in the opposite direction, contra
trend, rather then with the trend. As trend is self determined, your bear
market may provide my bull trade and vice versa. The Nasdaq, OEX, S&P and
the INDU have done exactly what they were supposed to do based upon the
chart information. Are support/resistance levels specific prices, no.
They are price areas. Momentum will often carry price through a support
price before it returns, a spike down. Or price might not quite reach a
resistance area due to pressure. that is what indicators are used for. You
don't need a statistics background to figure basic probability. Just take
each trade presented by the system and add then together then divide that
into the number of times price has actually reached the projected price.
That will give you a percentage of accuracy. The more data, the closer the
degree of accuracy. There is a difference between probability, degree of
accuracy and odds. In rolling dice. The odds for a 12 or a 2 are 36 to 1
each time you roll the dice, but each time those numbers don't come up, the
probability of it happening is far less then the odds. The houses edge,
they pay 30/1. Because heads or tails is even money doesn't mean that you
couldn't get 10 heads or tails consecutively and defy the odds and the
probabilities. The saying still holds, numbers don't lie, but liars use
numbers". One can make the numbers do anything they want, just look at
corporate financial reports. That is why TA works and Fundamentals has its
flaws.
----- Original Message -----
From: "jeff97_98_1998" <jprroth@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Sunday, July 07, 2002 7:03 AM
Subject: [RT] Re: Bear Market ?
> Not Joking,
>
> How does one compute a 60% probability of a market level
> being achieved? And in what time period? And with
> what amount of drawdown?
>
> Why not a 100% probability, given enough time?
>
> What is used to forecast probability?
> I flunked statistics and probability in school,
> so this subject is quite confusing to me.
>
> Also about support and resistance.
>
> How many support levels has the Nasdaq violated
> since 5000? So where was the support?
> If you breach 10 support levels, and bounce off the
> eleventh, does that prove support levels actually
> are tradeable?
>
> thanks,
>
> jeff
>
>
>
>
> --- In realtraders@xxxx, "ira" <irat@xxxx> wrote:
> > Some interesting things have occurred on the charts with Wednesday
> and Fridays numbers. There is nothing in price that has voided the
> down trend in the indexes and the rally prices are due for a
> retracement, but I would be careful about going short into a
> retracement of this rally. There appears to be a 60% probability
> that the Nasdaq composite could get to 1500, the 100 to 1170, the S&P
> to 1050 and the DOW to 10,000. There are some strong resistance
> points prior to reaching these numbers, but they are there. So, if
> you are going to short the first thing on Monday, it may pay to have
> a safety net somewhere. Good trading, Ira.
>
>
>
> To unsubscribe from this group, send an email to:
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>
>
>
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>
>
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