Current project I am working on evaluates the probability / percent chance that tomorrow will either be up or down.

After some thinking / research I have this:

Probability of an event = P(E)

n(E) = # favourable outcomes

n(S) = # outcomes

P(E) = n(E) / n(S)

Relating the above equation into candle terms:

up1 = # times a day was up

up2 = # times two days were up in a row

total = total number of days / bars

Results from XJO:

up1 = 1244

up2 = 646

total = 2363

Prob any 1 day being up = up1 / total

XJO: 1244 / 2363 = .53 ie. 53% possibility that a day will be up

Prob any 2 days being up = up2 / total

XJO: 646 / 2363 = .27 ie. 27% possibility that 2 up days will occur at any time. Error here?

This is where I think I may have it wrong, calculating prob for tomorrow (XJO):

up1 = 1244 (# times 1 day up)

dn1 = 1119 (# times 1 day down)

up2 = 646 (# times 2 days up)

dn2 = 522 (# times 2 days down)

totaldays1 = 1244 + 1119 = 2363 (total # outcomes for 1 day up or down)

totaldays2 = 646 + 522 = 1168 (total # outcomes for 2 days up or down

Today was up, then tomorrow up as well = (up1 + up2) / totaldays1 + totaldays2 ?

XJO: (1244 + 646) / (2363 + 1168) = .54 ie. 54% that tomorrow will be an up day, if today was an up day ?

Is this correct?

Mark

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