Tuesday, November 23, 2010

How To Read the Odds Table

There has been some confusion over how to read my daily odds table. Here is a summary of how to best use this information based on my current testing. I'll use last Friday's table as an example.  Please do not act on this table.

Look under the next day return section (the first section). On the far right there are odds for an up day and a down day. My test has been: If the odds are higher for an up day, did the market close up? If the odds are higher for a down day, did the market close down? Based on that simple criteria, it's been working 75% of the time, and if you consider whether or not you could have made money at some point, the success rate is higher. The success rate in terms of holding a profitable position at some point during the day is 21 for 23, over 90%.

The range I'm talking about are the rows in the next day return that say 0 to 0.5% etc. That shows where all the cases fell. I'm highlighting the range that appeared most frequently. Since the most frequent range was negative, it creates a mixed picture. In general, the % up/down day should be taken the most serious, so overall the bias is probably a little more positive in this table.

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