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Hi
Carl,
Thanks
for the explanation.
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size=2>
Is the
square root relationship changing if look at the monthly or quarterly
numbers (125, 355 trades)?
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Can
this relationship be expressed in a formula?
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face=Arial color=#0000ff size=2>
Thanks
again,
***** Erika *****
:-)
<FONT face=Tahoma
size=2>-----Original Message-----From: topos8
[mailto:topos8@xxxxxxx]Sent: Monday, August 26, 2002 5:53
PMTo: realtraders@xxxxxxxxxxxxxxxSubject: [RT] Re: Help
needed in mathematicsThe 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 ***** :-)To unsubscribe from this group, send
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