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The answer to your question is a standard exercise in probabilty
theory.
The reason that the probability of a profitable week is higher that
the probability of a profitable trade is simple. There are 28 trades
per week and each trade on average makes $144. So if you divide the
total weekly profit by the number of trades that week you will get a
number whose average is again $144 but whose variablity is much lower
(by a factor proportional to the square root of 28) than the
variability of the profit on a single trade. So you are much more
likely to make money in a typical week of many trades than you are to
make money on a single trade.
The same phenomenon explains why owning a casino is the sure road to
wealth: On any give roll of the dice or deal of the cards the casino
has only a small advantage over the customer. But when you look at
the casino's results over millions of dice rolls etc, it is a sure
winner.
Carl
--- In realtraders@xxxx, "Erika Toth Fluke" <erika@xxxx> wrote:
> HI,
>
> I'm trying to prove that a 422 sample win/loss distribution's
profitability
> will increase if I look at the weekly, monthly etc. data.
>
> The original dataset gives 45% win/loss on the trade by trade basis
and
> 71.6% on the weekly basis (about 28 trades/week).
>
> The data has the characteristics of the normal distribution, where
the
> average trade wins: $144
> standard deviation is: $1266.34
>
> Can somebody point it out why the weekly profitability increases so
> significantly or show me a formula that can be used to calculate the
> increase in profitability depending on the time frame?
>
> The result is there but, somehow I'm just not getting it.
>
> Thanks for your help.
>
> ***** Erika ***** :-)
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