Optimal strategy under statistical uncertainty - unsteady markets - page 3
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Yes, that's about the same for me. With the same conclusion.
But the value of all this is much deeper than it might seem at first glance.
It's the purest, most refined idea of trading on lagging indicators. :)
In terms of mathematics, the idea of two random processes interacting seems to have been invented by Shannon.
p^2 + q^2 = p ^ 2 + (1 - p)^2 = p^2 + 1 - 2*p + p^2 = 1 + 2 * p * (p - 1) = 1 - 2 * p * (1 - p)
I.e. at p equal to 1 or 0 we get probability of winning 1 - win-win variant no matter which side will fall with 100% guarantee. The lowest probability is 0.5 when p = q = 0.5, i.e. if the coin is perfectly right, the game turns into martingale and expectation is 0.
Where do you see 0 ?
0.5^2 + 0.5^2 = 0.25 + 0.25 = 0.5
In terms of mathematics, the idea of two random processes interacting seems to have been invented by Shannon.
I honestly don't know who first formulated it. TheXpert correctly pointed out that the tactic is bearded. I've also heard or read about it before. But only today I realised that it can also be applied to trading.
Where do you see 0 ?
0.5^2 + 0.5^2 = 0.25 + 0.25 = 0.5
For the gifted, I repeat that in this case the probability is 0.5 and the expectation is 0.
For those who are very gifted, I repeat that in this case the probability is 0.5 and the expectation is 0.
The mathematical expectation of what?
The mathematical expectation of what?
You're such a slowpoke, though. Money, of course!
I honestly don't know who first formulated it. TheXpert correctly pointed out that the tactic is bearded. I also used to hear or read about it somewhere. I've heard or read about it before. But I´ve realized it may be applied in trading.
Mathematically speaking, it's Shannon. But who in trading decided to use it - I don't know.
There are two conclusions from all this:
1. You can't bet 50/50 on a coin, you'll end up with 50/50 and nothing good.
2. In a rising market you only have to buy, in a falling market you only have to sell, then the probability will be fully realised.
Mathematically speaking, it's Shannon. But who in trading decided to use it - I don't know.
To be honest, I don't care who's first and who's last. What matters is the result.
You're such a slowpoke, though. Money, of course!
On page two of this thread I gave you an example, which you ignored.
Here's another example:
OROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROROR
A total of 20 outcomes, heads - 10, tails - 10.
Here we have: p=0.5 and q=0.5.
What is the zero expected payoff for the system you propose?
Mathematically speaking, it's Shannon. But who in trading decided to use it - I don't know.
There are two conclusions from all this:
1. You can't bet on a 50\50 coin, the result will be 50\50 and nothing good.
2. On a rising market you should only buy, on a falling market you should only sell, then the probability will be fully realised.
I can make a correction by informing you that there are also sideways trends, which will make your para. 2 will make it practically useless. You did not take this into account, and therefore formulated a strictly trend following strategy, which in no way can be fully implemented.