If I told you that there is a 99.61% probability that you can win the next trade on USDCAD would you believe me!
In trading the Theory of Runs answer a statistical question that ask about the probability to find another black (OR white) candle after a series of them.
The idea is simple, If the last candlestick on the chart was black so what is probability of the next candlestick to be black ?
According to the Theory of Runs the answer is 50%.
But if you have two consecutive black candlesticks the answer will be 25% ( = 100 * [0.5*0.5] ).
Also,if you have three consecutive black candlesticks the answer will be 12.5% ( = 100 * [0.5*0.5*0.5] ).
Now if you know that USDCAD had eight consecutive black weekly candlesticks the answer will be 0.39% ( = 100 * [0.5*0.5*0.5*0.5*0.5*0.5*0.5*0.5] ).
By another words the probability to have a white candlestick or a rising week will be 99.61% !
good luck for all of you
MB
