Statistics for Traders

Statistics is one of the most misunderstood and abused subject in mathematics (and science). The reason is something we can all easily understand – statistics is something we can all sort of relating to but counter-intuitive when applied in event by event situations.

Our brains are wired that way so that our ancestors can survive in nature. Since human has not evolved into any better forms for quite some time, yet our civilization is advancing in such a pace that even our computers are outdated every year or two, our minds are not that cooperative when it comes to making decisions that are drastically different from the ones that our ancestors faced. The ability to adapt our minds in making proper trading decisions boils down to our ability in applying logical thinking and statistical analysis properly.

It all sounds so complicated but in reality all you have to do is to take time understanding some basic concepts in statistics, then utilize the distilled rules and concepts to make better trading decisions, as oppose to relying on our gut feelings.

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ES TRIN Driver_20130527_184455
The TRIN Bullish Bias Play  premium content

TRIN is also called the Arms Index. It is often used as a swing term indicator. It can be used that way but it is a waste of the information provided by the index. First, net gain from day trading this TRIN bias.   The Setup [DTBMember] ...

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ES Basic Weekday Bias_20130521_222445
The Extremely Uneven Distribution Behaviour In Emini S&P 500 Regular Trading Session

Following is a chart showing the net gains from long only models that trade only on a particular weekday. The results are very interesting. Notice the drastic difference in net gain for each weekday. I can guess that you have many questions in you ...

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ES Weekly STOPD Patterns_20130514_215946
Weekly STOPD Pattern: S&P Bearish Continuation 1  premium content

There are quite a number of patterns that work around the weekly STOPD price levels giving us a solid edge. This one is a classic bearish continuation setup. Net gain chart below. The Setup [DTBMember] Low below previous week low by 25% of ...


ES VIX Bearish Core Driver.
The VIX Bearish Bias Play  premium content

The bearish property of VIX that no one talks about. If you need background information about the Volatility Index (VIX) please read The VIX Bullish Play. It has more background information about VIX that I do not want to repeat here. I am going to ...

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ES Gap Driver_20130508_192037
The One Bearish Setup Everyone Must Know Daytrading Emini S&P  premium content

This trading setup is kind of complement pattern of the one presented in The One Bullish Setup Everyone Must Know Daytrading Emini S&P. It is short only, strictly day trade from open to close. It has been profitable all these years. Yet no one ev ...

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ES Bullish Price Driver.
The One Bullish Setup Everyone Must Know Daytrading Emini S&P  premium content

If I am going to tell you that there is one simple day trading setup that works all these years you will probably think that I am kidding. What if I tell you that this setup is long only, strictly day trade from open to close? I must be joking, right ...


boxer training
Survival Guide To Trading The Stock Market Option Expiration Weeks

Option expiration weeks offer a lot of trading opportunities that the other weeks do not because the option market makers (can be firms, professionals, or anyone who has enough capital doing it) have to adjust their positions fiercely so that they ca ...


Pigeonhole Principle and the Trap of Higher Win Rate

Most of the time, we see traders focus heavily on higher winning rate and at all cost keeping it that way by various measures. System traders and rookie system creators are also obsessed with higher win rate. Is higher win rate really that important? ...


Interesting Site Stats

Just found out something interesting about Things I expected to be true for the site: 1. 10 am is the time where most of the comments are posted - busiest time of the site is also busiest time with the markets. 2. 5 pm is the ...

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Market Breadth Primer: Advance / Decline Issues  member only

Advance Issues is the number of stocks traded above their previous trading day close within a particular basket. For example, New York Stock Exchange provides the advance issues data across all the stocks traded on its board throughout the day. That ...

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