Performance
The cases where the pattern is absent, measured the same way — what a rule's hit rate has to be compared with before it means anything.
A rule that "works 53% of the time" says little alone. If the same outcome happens 32% of the time without the pattern, the pattern adds 21 percentage points — that difference is the edge, not the 53%.
Also called: control groups, comparison group.
Taught in
We Tested It: Friday's Low on MondayStrategy Playbook"If Friday can't beat Thursday's high, Friday's low gets hit on Monday" — checked on 20 years of S&P 500 days: the real hit rate, the comparison that matters, why Friday isn't special, and why a hit is not a trade.
Related terms