I am trying to understand a research paper. It contains a chart of prior and posterior probabilities (Bayes Probabilities) of an individual stock. However, I need guidance in interpreting what the values in the chart mean. In particular for any technical indicator, what does each P represent. I can guess what the first two lines mean. My guess is that P(stock up) is the probability of stock price going up. Similarly, my guess is that P(stock down) is the probability of stock price going down.
This is what the research paper says about the chart:
Table 2 tabulates several technical indicators calculated by BP. It also gives the result of prior probability and posterior probability. The value of each technical indicator stands for the performance accuracy of the individual stock according to the recent 300 trading days. The result can provide a standard of optimal decision-making for selecting significant technical indices.
So my questions are:
- Is my understanding of P in the first two lines correct ?
- What is P(non) [my guess is the probability of stock price not changing ?]
- What is P(up|up) ?
- What is P(down|down) ?