Recency Bias With Streaks and Occurrence Frequency

2020년 7월 13일

In this video idea, I discuss the idea of how to check for bias in recent events in an indicator by requiring that X of the last Y candles meet a certain condition.

It is common to refer to recency bias as something that can skew your view on things based on recent events. In this case, I am referring to applying a bias to our indicator based on recent events.

I show you how I go about checking for occurrence frequency to require that X of Y candles are red in this example. Specifically, we check for at least 3 red candles in the last 4 or 5 candles.

By using float values to represent true or false with a 1 or 0 we can easily sum the values of the 1 or 0 on our conditions for the last Y candles. Once we get the occurrence account we can compare the occurrence that actually occurred to the number we actually required on X.

We take this a step farther and show how this might be used by requiring another condition to be true on the current candle as well and plot to share when this next condition is true or false (1:0) as well.