what does a symmetrical distribution tell you 
symmetrical distributions are used by traders to establish the value area for a stock currency or commodity on a set time frame this time frame can be intraday such as 30 minute intervals or it can be longer term using sessions or even weeks and months a bell curve can be drawn around the price points hit during that time period and it is expected that most of the price action approximately 68 of price points will fall within one standard deviation of the center of the curve the curve is applied to the y axis price as it is the variable whereas time throughout the period is simply linear so the area within one standard deviation of the mean is the value area where price and the actual value of the asset are most closely matched if the price action takes the asset price out of the value area then it suggests that price and value are out of alignment if the breach is to the bottom of the curve the asset is considered to be undervalued if it is to the top of the curve the asset is to be overvalued the assumption is that the asset will revert to the mean over time when traders speak of reversion to the mean they are referring to the symmetrical distribution of price action over time that fluctuates above and below the average level the central limit theorem states that the distribution of sample approximates a normal distribution i e becomes symmetric as the sample size becomes larger regardless of the population distribution including asymmetric ones example of how symmetrical distribution is usedsymmetrical distribution is most often used to put price action into context the further the price action wanders from the value area one standard deviation on each side of the mean the greater the probability that the underlying asset is being under or overvalued by the market this observation will suggest potential trades to place based on how far the price action has wandered from the mean for the time period being used on larger time scales however there is a much greater risk of missing the actual entry and exit points image by julie bang investopedia 2019symmetrical distributions vs asymmetrical distributionsthe opposite of symmetrical distribution is asymmetrical distribution a distribution is asymmetric if it is not symmetric with zero skewness in other words it does not skew an asymmetric distribution is either left skewed or right skewed a left skewed distribution which is known as a negative distribution has a longer left tail a right skewed distribution or a positively skewed distribution has a longer right tail determining whether the mean is positive or negative is important when analyzing the skew of a data set because it affects data distribution analysis a log normal distribution is a commonly cited asymmetrical distribution featuring right skew skewness is often an important component of a trader s analysis of a potential investment return a symmetrical distribution of returns is evenly distributed around the mean an asymmetric distribution with a positive right skew indicates that historical returns that deviated from the mean were primarily concentrated on the bell curve s left side conversely a negative left skew shows historical returns deviating from the mean concentrated on the right side of the curve image by sabrina jiang investopedia 2020limitations of using symmetrical distributionsa common investment refrain is that past performance does not guarantee future results however past performance can illustrate patterns and provide insight for traders looking to make a decision about a position symmetrical distribution is a general rule of thumb but no matter the time period used there will often be periods of asymmetrical distribution on that time scale this means that although the bell curve will generally return to symmetry there can be periods of asymmetry that establish a new mean for the curve to center on this also means that trading based solely on the value area of a symmetrical distribution can be risky if the trades are not confirmed by other technical indicators 