Short Term Trading Member Forum

[techcharter]

NDX: Leave It To Chance

I'm in awe of the NDX spending 6 days below the lower 20 day bollinger band. Each band is 2 Sigma from the average. The band represents a statistical probability where a stock or index will be. Bands separated by 2 Sigma will contain the price 95.5% of the time. That leave a 4.5% chance the price will trade outside the bands on a given day.

What are the odds of a coin toss being heads 6 times in a row?
it's 50%*50%*50%*50%*50%*50%= 1/64
10 times = 1 out of 1024

Using the probability distribution of Bollinger bands, the odds of the price trading outside the bands 6 times in a row is
4.5% * 4.5% * 4.5% * 4.5% * 4.5% * 4.5% = 8 out of 1 Billion chances.

Your chance of winning a state lottery 6 of 48 numbers is 5 out of 1 Billion.

The market is sending the message this is a very powerful trend change.