A probability theory problem
What is the probability of these events occurring simultaneously (000 => 1 and 00 => 1, and 0 => 1)?
I cannot understand the question in this formulation.
But I can note that for independent events, after realizing the combination 000, the probability of getting 1 is 0.5 (000 => 1=1/2).
00 => 1=1/2
0 => 1=1/2
Какова вероятость одновременного наступления этих событий (000 =>1 и 00 => 1, и 0 =>1)?
Completely confused as to how to determine the total probability of events:
Task:
Let's say an up candle is '1', a down candle is '0'.
Event: 000 => 1 (the first three candles are down, so the next one is up). Event Probability: 0.7
Event: 00 => 1 (the previous two candles are down, the next one is up). Event Probability: 0.33
Event: 0 => 1 (previous candle is down, it means the next one is up). Probability of event: 0.5
And it does not necessarily mean that with 000 => 1 comes also 00 => 1 etc.
What is the probability of these events occurring simultaneously (000 => 1 and 00 => 1, and 0 => 1)?
P.S.: I'm embarrassed, but I'm not thinking straight. :)
The probability will be 0.7 (based on problem conditions) because 000 includes both 00 and 0 (the last zeros)
It seems to me that the probabilistic approach to trading, from my point of view, is unpromising.
The fact is that the behaviour of the market is subject to fairly strict laws, the regularities of which are understood by a few. For most people, market behaviour appears chaotic and unpredictable... But it is not. The algorithm of market behavior at any given moment is set by the specific events happening in the world. Therefore, a successful trader, knowing about the occurrence of certain or sudden events, can accurately enough specify the movement of a pair. The task of each trader, from my point of view, is to find these regularities of market behavior.
From my point of view - a very promising direction can be an attempt to describe market behavior at a certain moment of time as a physical ball, which receives some impulse to move. And the stronger this impulse is, the more (due to its inertia) obvious will be the direction of movement and the possible path...
The task of every trader, from my point of view, is to find these patterns of market behaviour.
From my point of view - a very promising direction can be an attempt to describe market behaviour at a particular moment in time as a physical ball, which receives some impulse to move. And the stronger this impulse is, the more (due to its inertia) obvious will be the direction of movement and the possible path...
And how do you want to look for these regularities? Read in a textbook? Or will you have to resort to a probabilistic tool? How will you evaluate events without the apparatus of probability? Or do you think
that there will always be an exact and single market answer to certain actions?
What is the probability that these events will occur simultaneously (000 => 1 and 00 => 1, and 0 => 1)?
Completely confused as to how to determine the total probability of events:
Task:
Let's say an up candle is '1', a down candle is '0'.
Event: 000 => 1 (the first three candles are down, so the next one is up). Event Probability: 0.7
Event: 00 => 1 (the previous two candles are down, the next one is up). Event Probability: 0.33
Event: 0 => 1 (previous candle is down, it means the next one is up). Probability of event: 0.5
And it does not necessarily mean that with 000 => 1 comes also 00 => 1 etc.
What is the probability of these events occurring simultaneously (000 => 1 and 00 => 1, and 0 => 1)?
P.S.: I'm embarrassed, but I'm not thinking straight. :)
Sergey, if elementary events (appearance of a white or black candle) are considered independent (which is almost true in financial markets) then the probability of simultaneous occurrence of P(000), P(00) and P(0) is a product of probabilities: P(000) x P(00) x P(0). For dependent events (when, for example, a lot is drawn - one lucky ticket out of N pieces and after two unsuccessful attempts the probability of a successful one increases) the probability of the next event is calculated through ROC (conditional probability of already occurring/not occurring) events.
Your formula "three previous candles down, so the next up" is imho incorrect, because the probability of the 4th candle of a certain type does not depend (or almost does not depend, or the degree of this dependence is not easy to determine) on the previous three (or N). The probability of appearance of three identical bars P(000) = 0.5 х 0.5 х 0.5 = 0.125, but the probability of the 4th does NOT depend. of this event, i.e. it also = 0.5
And the probability of 3 white candles on EURUSD, 2 black candles on GBPUSD and 1 white candle on USDCHF at the same time will be = 0.125 x 0.25 x 0.5 = 0.015625, but it does not predetermine the future in any way.
Let Mathemat correct if anything is wrong.
And the probability of 3 white candles on EURUSD, 2 black candles on GBPUSD and 1 white candle on USDCHF at the same time would be = 0.125 x 0.25 x 0.5 = 0.015625, but it does not predetermine the future in any way.
If this is the correct answer to the question posed, then I did not understand the assignment...
And in general there may be some correlation of candlesticks in the market, which means the probability may not be 0.5. The question of how much also has an answer, e.g. you can try to calculate it with Excel.
I'll correct it, but not right now. To be honest, I just don't understand the terms of the topicstartner's problem either. I am writing an article about it. There will be big surprises, I guarantee, and there is a different approach. I myself am a bit shocked by what I found...
And the probability of 3 white candles on EURUSD, 2 black candles on GBPUSD and 1 white candle on USDCHF at the same time would be = 0.125 x 0.25 x 0.5 = 0.015625, but it does not predetermine the future in any way.
If this is the correct answer to the question posed, then I did not understand the assignment...
It is an example of calculating the probability of three independent events occurring together. The question itself is imho incorrect because it assumes the dependence of events and it does not exist (or at least it is not expressed explicitly).
What are dependent events: there are three balls in a bag, two of them red, one blue. The probability of getting the blue ball out on the first try = 1/3, the probability of getting the red ball out = 2/3. Let's say the red one is taken out, and there are two balls left. Now the probability (already conditional probability UW) of pulling both red and blue balls = 1/2. Classical probability theory considers dependent and independent events. In financial markets imho we are dealing with weakly correlated (Low-dependent) events, therefore classical probability theory is not applicable here. It is necessary to look deeper into correlation of events that may help understand statistical regularities more deeply. But correlation is not constant either.
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Completely confused as to how to determine the total probability of events:
Task:
Let's say an up candle is '1', a down candle is '0'.
Event: 000 => 1 (the first three candles are down, so the next one is up). Event Probability: 0.7
Event: 00 => 1 (the previous two candles are down, the next one is up). Event Probability: 0.33
Event: 0 => 1 (previous candle is down, it means the next one is up). Probability of event: 0.5
And it does not necessarily mean that with 000 => 1 comes also 00 => 1 etc.
What is the probability of these events occurring simultaneously (000 => 1 and 00 => 1, and 0 => 1)?
P.S.: I'm embarrassed, but I'm not thinking straight. :)