After reading evidence-based technical analysis, about half is still not clear. imho a pretty bad book, the author repeats obvious nonsense like "a dog has 4 legs, but something with 4 legs doesn't have to be a dog!" atleast 20 times and takes 400-500 pages trying to explain something that can be explained in 100< pages.
If I have an indicator and want to know if the signals it's spitting out are not random, I could assume there's 2 possibilities: false signal and correct signal. So in 64 different instances where the indicator signals we assume SD = sqrt(64*0,5*0,5) = 4. So if we have 44 correct signals, we can assume that there's a 99,7% chance that the indicator is not spitting out random signals.
But how do I calculate the probability of the indicator being, say, right 80% of the time? My assumption is SD = sqrt(64*0,8*0,2) = 3,2. So to have a 99,7% chance of being correct 80% of the time I need 51,2+9,6 = 60,8 or 61 correct signals out of 64. Is this correct?
If I have an indicator and want to know if the signals it's spitting out are not random, I could assume there's 2 possibilities: false signal and correct signal. So in 64 different instances where the indicator signals we assume SD = sqrt(64*0,5*0,5) = 4. So if we have 44 correct signals, we can assume that there's a 99,7% chance that the indicator is not spitting out random signals.
But how do I calculate the probability of the indicator being, say, right 80% of the time? My assumption is SD = sqrt(64*0,8*0,2) = 3,2. So to have a 99,7% chance of being correct 80% of the time I need 51,2+9,6 = 60,8 or 61 correct signals out of 64. Is this correct?