Identify High-Probability Zones
The distribution curve shows where price is statistically most likely to settle, creating objective reference points for mean reversion trades.
Measure Statistical Risk
Positions taken at the tails of the distribution carry higher risk while those near the center align with statistical probability.
Apply to Custom Market Data
The calculation can be applied to any price series in NinjaTrader, adapting the statistical framework to various instruments and timeframes.
How does the distribution help identify trading levels?
Prices at the distribution's tails represent low-probability extremes. If price sits at the 95th percentile, it is statistically stretched and mean reversion becomes favorable. The distribution quantifies what qualifies as extreme.
What are Ehlers' methods and why are they used?
John F. Ehlers pioneered applying digital signal processing to financial markets. His techniques filter noise and extract meaningful cycles from price data. The indicator uses his methods to create more accurate probability estimates.
Does the distribution work in trending markets?
In strong trends, price can remain at distribution extremes longer than expected. The distribution assumes some degree of mean reversion. Combining probability analysis with trend filters helps avoid fading strong momentum.
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