Standard Deviations Spreadsheet
June 8th, 2007I wrote a spread sheet so I could look at a glance and get a price range. This combined with technical analysis is how I SHOULD make my trades. I always start out this way, but I get side tracked.
This spreadsheet helps bring back a little reality to my decision making. If I am thinking about a target price, and I see that it is 2 standard dev’s away, I probably would not take the trade.
The spreadsheet is written for Gnumeric, which is more accurate than Excel. And free. And runs on Linux.
Standard Deviation Spreadsheet
You plug the volatility, price and date into the spreadsheet, and it will calculate the price ranges to 1, 1.5 and 2 standard deviations.
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June 13th, 2007 at 9:14 pm
[...] That is the whole point of the 68-95-99.7 Rule when making vertical spreads. If you place your spreads @ 1σ, then you have a 84% chance of a profitable trade. Since σ calculates both appreciation and depreciation, we only need to be concerned about half, giving us a free ride on the other 50% probability. 1σ / 2 + 0.50 = 84%. And yet another use for my Standard Deviation spreadsheet. [...]