How to use the InsidePP Statistic to make better trading decisions?

InsidePP Statistic Bar

What is the InsidePP Statistic?

One of the statistics we publish is the InsidePP or Inside Previous Period statistic.  This is essentially answering the question: "What are the odds that the current bar will be an Inside Bar?" or, more accurately, "How often has the current bar been an Inside Bar in the past 30, 90, 180, or 365 days?".   We give you a percentage of how often the given 30-minute bar does NOT tag or pass through the previous 30-minute bar’s High or Low.  

The two images below show and explain an example.  The graphic labeled InsidePP Bar shows that Green Bar as an Inside Bar.  The next graphic explains why.  As you can see the Green Bar has not tagged the High or the Low of the previous Red Bar.  This is an Inside Bar.  We give you the percentage of time this has happened for every 30-Minute Period.

 

InsidePP Statistic Bar
Inside Bar
Green Bar has not tagged Red Bar's High or Low

How to use the InsidePP Statistic to make better trading decisions

Knowing how often this has happened in every 30-Minute Period can be very useful.  The InsidePP statistic can help you determine which 30-minute periods are more likely to have directional movement, especially when combined with the Range statistic for the given 30-Minute period.  Conversely, a High InsidePP with a Low Range, may indicate a good time to stay out of the market.  It helps identify 30-minute periods that are more likely to lack directional movement.  Knowing when NOT to trade can be at least as important as knowing WHEN to trade, maybe even more.

 

Another benefit of the InsidePP statistic is that you have a destination to trade towards, that is, if you have a low percentage and an acceptable Range statistic.  For instance, a low InsidePP statistic of 5.00% means that it has only been an inside bar 5.00% of the time, meaning it has tagged the previous edge, either high or low, 95% of the time.  In my opinion, that is a pretty good stat, especially if the 30 min Median or Average Range statistic is high for that period.

If you would like to have the InsidePP statistic explained further, please watch the video Lesson InsidePP as part of our Statistics For Trading Course on our YouTube channel. (see below)

Thinking in Probabilities

Here at statsfortrading.com we try to provide day traders statistical information because we believe that statistics are the basis for thinking in probabilities.  When you think in probabilities, your trading decisions are based on facts and not emotion.  

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