Start here · Lesson 4 of 10

What a base rate is

A base rate is the plain historical frequency: across many past years, how often did this kind of situation finish up versus down? We call it climatology, the way a weather service knows how often it rains in April before looking up at the sky.

Our published probability is the base rate. It is deliberately not a stock-specific 'edge,' because we tested many such edges and none held up (the next lessons explain that).

A base rate is a humble, honest starting point. It says: absent a proven predictor, here is how often situations like this have gone one way or the other.

See also: climatologyThe base rate from history — how often this kind of situation resolved up versus down across many past years, before any stock-specific adjustment., probabilityHow often situations like this one have resolved upward in the past — a frequency, not advice or a prediction.