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That's the way I look at it too...
Gwenn
Thomas Pfluegl wrote:
> Hi Kim,
>
> >Just curious, how many times do you have to expect to have to toss the coin
> >to get 20 consecutive heads or tails? I have a feeling that it might require
> >a very large number of trades to see that happen ( on average).
> >thanks for an interesting and informative post
> In terms of probabilities there is no way to determine when it will happen.
> When you read in the newspaper that ON AVERAGE there are 3 accidents out of
> 950.000 car trips, then it might happen to a newbie on the very first day
> he drives, or - never.
> I tested how long it takes to to get 20 consecutive heads or tails, and in
> 10.000 iterations it happend on run
> 1: 4658
> 2: never
> 3: 318
> and so on.
> But if I would run the test for one month, I am sure we will find no
> pattern. It also might happen on the first 100 iterations.
> When you are trading you should assume your max. Drawdown will ocur during
> the first few weeks.
>
> See a discussion on the "gambler's fallacy" (i.e. after a string of
> red/losses, green/profits is bound to come out) at
> http://www.iitm.com/tips/Tips-MM.htm (Van Tharps "Tips on Money Management
> & Position Sizing")
>
> Regards & have a nice weekend,
> Thomas
>
> ----------------------------------------------------------------------------
> Thomas Pfluegl, Rudersdorf 8, A - 4212 Neumarkt
> Austria Tel. ++ 43 - (0) 7941 - 8106
> http://keplerweb.oeh.uni-linz.ac.at/trading/index.html
> ----------------------------------------------------------------------------
> Austria/Europe --> high mountains --> Mozart --> no kangaroos
> ----------------------------------------------------------------------------
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