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Strategies & Market Trends : Classic TA Workplace -- Ignore unavailable to you. Want to Upgrade?

To: Win-Lose-Draw who wrote (130608)	3/12/2006 11:56:23 AM
From: the-phoenix	Read Replies (2) \| Respond to of 209892

WLD: Three SDs "contains" in rangebound markets, but trading on that premise is a sure way to blow up, in both bull and bear directions, over the long haul. Market returns don't follow a normal (or log-normal or etc etc etc) distribution. Fine, but this isn't a measure of market returns. Here is a ten-year chart of the NDX:SPX weekly closing ratios. I think the jury is out on whether this is a normal distribution or not: ttrader.com Nor do I care. I wouldn't trade any method without appropriate stops. The use of standard deviations via Bollinger Bands on non-normally distributed market price data is pretty standard TA. Is it statistically justifiable? Not if you are a slave to the theoretical world of inferential statistics, but if you are a trader and can make money doing it, then yes, it is.