Hi, I’ve been trying to develop an indicator based upon viewing individual candles as vectors and trying to extrapolate a formula, in response to these vectors, based around the concept of probability. basically, dumbing things down a bit, we have a few “givens”–i know that things don’t necessarily work this way, but go with it ;D. The givens are…
- the probability that a candle will go up is 50%–down is 50% as well–candles where the open is equal to the close are ignored…(binomial theory is introduced here)
- the average magnitude for each candle is equal to the sum of the absolute value of each candle’s pip movement, divided by the total number of candles on the chart.(the magnitude isn’t necessary–just threw it in for some background information)
So, having those things out of the way, my question is basically this, is there some kind of mathematical formula or series or something, that is able to keep a running tally of the probability that a candle will go up vs. down? I would appreciate anybody’s help with this–it’s been driving me crazy for the past few days–shoulda payed attention in calc =.
thanks!