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You can't use statistics that way. An increase in probability only occurs
if the events are dependent.
For example, suppose you are trying to draw an ace of spades from a deck of
cards. If you continue to draw and discard cards that aren't the ace of
spaces, your probability of drawing the ace of spades increases on each
draw. But if you put each drawn card back into the deck and reshuffle, your
probability of drawing the ace of spades on a given draw will never change,
no matter how many times you fail to draw it.
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%.
Otherwise, it would be easy to develop a system to beat a roulette wheel.
<G>
----- Original Message -----
From: Michel Amelinckx <Michel.Amelinckx@xxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Thursday, April 13, 2000 7:58 AM
Subject: RE: Money Management Stops
> And because you have such a great number of profitability, did you know
that
> every time you have a losing trade the odds of your next trade goes up.
> 70% prof - after 2 consec losing trades - probability next trade will be a
> winner is 91%
> 70% prof - after 3 consec losing trades - probability next trade will be a
> winner is 97%
> 70% prof - after 4 consec losing trades - probability next trade will be a
> winner is 99%
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