The New Science of Trading

The premier destination for intra-day analytics for U. S. equities.

Probability-Based Levels

The Intra-Day Momentum Method

Risk Management

Manage risk by using the formula used by professional trader/blackjack player/math professor Ed Thorp.

Extended Levels

Probability-based Levels

Position Size

Size your position according to your risk tolerance.

“Does trading in the direction of the trend give a trader an EDGE?”

This is a question that seems to have been a topic of conversation among traders since ‘forever’.  Due to how most technical indicators are calculated, this is not something that can be proven using traditional technical analysis.  Therefore, the goal has been to create a way to answer the question mathematically.

You should be aware that traditional technical indicators require that a time period close before the calculation can be confirmed.  This is a fundamental ‘flaw’ in almost every single technical indicator.  If someone tells you that a stock ‘tested’ a moving average, that’s not always the case.  Why? A moving average is constantly moving. Therefore, it cannot be calculated until the end of the time period to which the indicator is being applied to.  Thus, on a daily chart, the calculation that determines the moving average price is not available until the end of the day.  As a result, it is not a real-time indicator.

In this article, I will demonstrate mathematically how Trend Following is likely to give a trader an edge.  It also helps in reducing risk.

Historical Probabilities of The Intra-Day Momentum Method

The image above shows that the ability to eliminate the possibility of an intra-day reversal increases the success of the levels alone by approximately 6-7%.

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