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Mickey is wrong about the casino example. Hopefully, each event is random.
50-50 on each event (red/black)
However, trading systems and the resulting trades are not necessarily
independent. I personally haven't seen a system where the trades are
dependent, but I'm sure there are some.
It seems plausible that when trading multiple correlated securities,
especially if some are leading, that exploitable trade dependencies might
exist. (ie. paper trade market leadership, and then money trade the
laggards).
Has anybody tried anything like this and statistically analyzed the results.
Kevin Campbell
In a message dated 4/13/00 3:19:00 PM Central Daylight Time, bjagow@xxxxxxx
writes:
> Rubbish, Mickey.
> While you still have a bankroll, buy a roll of pennies and start flipping
> :o)
>
> Bob
> -----Original Message-----
> From: owner-metastock@xxxxxxxxxxxxx
> [mailto:owner-metastock@xxxxxxxxxxxxx]On Behalf Of Michel Amelinckx
> Sent: Thursday, April 13, 2000 11:10 AM
> To: metastock@xxxxxxxxxxxxx
> Subject: RE: Money Management Stops
>
>
> Sorry but I by this "every time you have a losing trade the odds of your
> next
> trade goes up" I meant the PROBABILITY of next trade goes up. You always
> have 50% odds.
>
> > If the success rate is 70%, it's true that there is about a
> > 99% chance of
> > having 4 losing trades in a row. However, once you've
> > already had 3 losing
> > trades, the chance of the next trade being a success is still
> > only 70%.
>
> No I don't agree, a system 70% prof. and having 3 consecutive losing
> trades - the probability that the next trade will be a successful is 99%.
> If you have a system that is 55% correct of the time. If you wait for 4
> consecutive losers you have almost an 95% probability that the next trade
> will be successful.
>
> Same thing with roulette, they hate me in the casinos because if I play
> roulette I play on red and black. I wait till red (black)past 3 or 4 times
> in a row and then play on the other colour. And the longer you wait, like 5
> or 6 times on red (black) the higher the probability the next will be the
> other colour. Although 6 times the same colour is very rare. And this they
> don't like in casinos.
>
> Greetings
>
> Mickey
>
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