Trading with Market Statistics VIII. Counter Trend Trades in Symmetric Distributions

[Dogpile]

thx jerry, welcome back. yes, 9/20 was a great trading day.

[BlowFish]

Jerry do you pay much attention to the symmetry of the distribution? In particular I am thinking of taking a trade when the market is actually balanced but the distribution is still asymetric. Here is an example from today. To me long side seemed right even though the market was in balance. Interestingly the 2 minute chart showed +ve scue. The pvp seems quite sensitive to how the data is sampled. Funnily enough the slight smoothing you get by using say a 2 minute bar often seems to be helpful.

[jperl]

	Quote:	BlowFish
	Jerry do you pay much attention to the symmetry of the distribution? In particular I am thinking of taking a trade when the market is actually balanced but the distribution is still asymetric. Here is an example from today. To me long side seemed right even though the market was in balance. Interestingly the 2 minute chart showed +ve scue. The pvp seems quite sensitive to how the data is sampled. Funnily enough the slight smoothing you get by using say a 2 minute bar often seems to be helpful.

Symmetric distributions (PVP ~= VWAP) are tough to trade especially when you have multiple peaks as in the example you show. My initital reaction would be to let it pass.

[BlowFish]

Good point. Your probably more disciplined than me Jerry! As the old adage goes 'no position is a position'. I do find that sometimes I try and 'force' a trade particularly after missing a legitimate one (maybe just because I was doing something else) or for a variety of other reasons. When in doubt maybe it's wise to say 'what would newbie do' hehe.