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Hi Gary,
Thanks for your contribution.
Thomas Pfluegl <thomas.pfluegl@xxxxxxxxxxxxxxxxx> wrote:
>> I did a small test with Excel (coin toss, which is a 50/50
>> system), to reveal how many Consecutive Losses are 'necessary' to
>> suffer a 50% drawdown
>Is that a 1:1 payoff system, i.e. Heads wins 1, Tails loses 1?
Correct, I added no edge to the sumulation.
>If so, its expectation is zero. It's a breakeven system before
>considering commissions or slippage. No sane trader would trade
>something like that.
I hope so.
I prefer testing zero expectation games rather then indicator setups.
>> A simulated coin toss expectation game (which ran almost a week)
>> showed, that one must expect up to 20 (probability: 1 : 1.048.576
>> or 0.000095%) consecutive profits/losses in a 50/50 system!
>Personally I'm quite comfortable risking against 1-in-a-million odds.
Everyone has to live with odds of that size, even if you stat in bed all
day long, there is slight chance that something bad may happen to you, you
would never imagine.
> Hell, my odds are worse than that every time I drive my car.
Good every day live example.
Regards & have a nice weekend,
Thomas
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Thomas Pfluegl, Rudersdorf 8, A - 4212 Neumarkt
Austria Tel. ++ 43 - (0) 7941 - 8106
http://keplerweb.oeh.uni-linz.ac.at/trading/index.html
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Austria/Europe --> high mountains --> Mozart --> no kangaroos
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