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Pastimes : ASK Vendit Off Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: MeDroogies who wrote (17384)	12/20/2000 4:32:11 PM
From: Walkingshadow	Read Replies (1) \| Respond to of 19374

<< It's something like the Heisenberg Uncertainty principle...you can know the speed or position of the quantum unit at any point in time, but you can't know both. >> True enough. But my point was that market behavior can be approximated with statistical functions, and rough probabilities can be roughly estimated. Admittedly, as you say, these are both dynamic. Still, there are some market events which are way, way out of the envelope, but the vast majority are not. And however poorly described that function is, and dynamic, still the tendency to regress towards the middle of the distribution is very strong. The farther the outlier from the mean, the less precision is necessary in defining that mean in order to make a probablistic statement regarding the position of that outlier in relation to the mean. To take your Heisenberg Uncertainty Principle analogy a step, consider that the distribution of the positions of an electron in an orbital can be described with a degree of accuracy which exceeds 90%, but can never reach 100%. The electron spends the vast majority of its time somewhere in that orbital volume, but doesn't have to spend all its time there; only 90% or so. Though the electron may momentarily be in the next county, most of the time it will be found in its orbital. This says nothing at all about its momentum. Still, if you observed that electron in the next county, you'd be on pretty good statistical grounds to bet that it wouldn't stay there for long, and the next time you looked, it would again be found in its orbital. And similarly, seven consecutive down days in a row is possible, but not likely. So also is seventy down days in a row, but even more unlikely. The average consecutive run of down days in a row is probably more like three or so, making seven an outlier which on statistical grounds would be most likely to be followed by at least one up day. That didn't happen today, making it even more likely that tomorrow will be an up day. 'Course, I said the same thing about six down days in a row, and that didn't work out too well <ggg> Maybe I'll go see a fortune teller instead, and fergit the physics........... WS