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Frequency Distribution: Definition in Statistics and Trading

File Photo: Frequency Distribution: Definition in Statistics and Trading
File Photo: Frequency Distribution: Definition in Statistics and Trading File Photo: Frequency Distribution: Definition in Statistics and Trading

Definition of Frequency Distribution

A frequency distribution shows the number of observations in an interval in graphical or tabular form. The frequency is the occurrence of a value inside a break, whereas the distribution is the pattern of the variable’s frequency.

The interval size depends on the data and the analyst’s goals. The intervals must be mutually exclusive and exhaustive. Statistical contexts often employ frequency distributions. Typically, frequency distributions resemble average distribution charts.

Understanding Frequency Distributions

Frequency distributions are statistical tools that show the distribution of observations within a test. Analysts utilize frequency distributions to display sample data. There are numerous height categories for children.

Others of the 50 youngsters measured are tall and small, but the medium range is likely to be more common. The most critical data collection variables are non-overlapping periods and all feasible observations.

Frequency Distribution Visualization

Histograms and bar charts use columns to depict frequency counts and variables. The y-axis indicates the number of children in kid height, and the x-axis is height. The columns show the number of children with measurements measured at each interval.

Typically, a histogram chart displays a normal distribution, with most occurrences in the center columns. Using frequency distributions, charting normal distributions can provide observation probabilities split by standard deviations.

Present frequency distributions as a frequency table, histogram, or bar chart. A frequency distribution table follows.

Height of Children in a School
(Height) Interval 4′ 4’5″ 5′ 5’2″
Frequency 2 5 6 3

Trading Frequency Distribution

Although not often utilized in investment, traders who follow Richard D. Wyckoff, a pioneering early 20th-century trader, adopt a frequency distribution method for trading.

Investment firms still instruct traders using the method, which takes skill. Floor traders devised the frequency chart, often called a point-and-figure chart, to track price activity and discover patterns.

The frequency count is on the x-axis, and the variable is measured on the y-axis. Xs and Os represent price changes. When three X’s appear, traders see an increase because demand exceeds supply. In contrast, the three O’s suggest supply exceeding demand.

Types of Frequency Distribution

Frequency distributions include grouped, ungrouped, cumulative, relative, and relative cumulative.

How important is a frequency distribution?

Frequency distributions structure vast data sets. It organizes data from a population based on particular qualities so that a person may make inferences about it.

How can I build a frequency distribution?

To create a frequency distribution, note the interval-based classifications in one column and add the values in each isolated category depending on how often it appears. Note the frequency in the second column.

Bottom Line

Frequency distributions show the number of observations per interval. Though uncommon in investing, some traders adopt this strategy. This frequency chart is a point-and-figure chart that uses price action to identify patterns.


  • Statistics frequency distributions show the number of observations inside an interval.
  • Graphical or tabular frequency distributions are more accessible to grasp.
  • Normal distributions, which depict probabilities distributed among standard deviations, benefit from frequency distributions.
  • Frequency distributions help traders see price patterns in finance.

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