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Question for Bruce


I know you are leaning more and more on probabilities via options. This quote got me scratching my head a bit, could you clarify please?

ON SPX - 31 point one sd move for this week so 86 % chance we tag 2515 or drop down to 2485 before weeks end....one could use the opening 15 minutes of the week and use stop and reverse order until the 15 points is achieved...just an idea....today we have a 14 pt one sd move...so 86 % chance spx will print 2507 or 2493! one could use the opening 5 minute bar to try to go for that but you would need to think about gaps etc with these thoughts....these two ideas turns one into a breakout trader but that would be ok with proper risk management

Are you using probability of touch for the 86% calc or are you using Prob OTM?
I am not following the math here, my thought is 1SD should cover 68% probability of expiring within that range, not the Prob of touching either end?
As I look @ SPX chain now with price 3 points higher than weekly open, it's only a 53% chance of touching 2515?

Are we mixing probabilities or am I , as usual, missing something.

Reply at leisure, I'm heading out and won't be able to get back here until 3PM CST.

Thanks Bruce.
here is my answer..in video form....hope it makes sense and let me know if u want to see the slides as a hard copy
No video below? Try this link: for_big_mike.swf






Thanks Bruce, i get what you're referencing now. Right/wrong? Who really knows.

I did not get much out of the TT scalping segment originally but maybe with your perspective I can give it another look.

Thanks again.
I didn't enjoy that one either but I like the statistic part of it ......but even with all these statistics that show high probabilities it can still be so hard to actually trade for them....I always think about the overnight high and low statistic that Dr. Brett threw out to us all years ago that says an overnight high or low will be broken 95 % of the time....well that is true but actually taking trades and holding on long enough to actually reach those objectives can seem impossible some days for those who trade and target those extremes......Wednesday is Fomc and I think I'm taking a day off
Originally posted by Big Mike

Thanks Bruce, i get what you're referencing now. Right/wrong? Who really knows.

I did not get much out of the TT scalping segment originally but maybe with your perspective I can give it another look.

Thanks again.
I believe TT also calculated the move from the cash close and would include overnight if it moved that much.
Expected move to be 7 points (example) and is 7 points off the cash close, they would fade that.

I am more of a breakout trader by nature and may look into this 1/2 SD move as possible bigger target for 1 minute breakout and other trades.
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