Direct Theory of Probability
All problems commonly met within this branch turn on counting the number of ways in which events can occur.
For example, what is the probability that three coins being tossed will all show heads?
There are 8 possible results; the probability of three heads is p=⅛
In trading, the number of ways events can occur is often too numerous to count. This is even further complicated when myriad technical indicators and strategies are thrown into the mix. Still, perhaps we can use the direct theory of probability on ourselves, on our behaviour - what is the probability that we will cut our losing trades whilst they are still small? If we don’t care too much about being wrong = always.
To succeed at this game, we must ensure that we are winning more than we are losing over the set of all trades. I don’t think the answer to this problem is correctly identifying the next coin flip; the answer is to make sure that our winning trades are bigger, much bigger, than our losing trades, and we can achieve this through the understanding and practical application of combinations and permutations.
All problems commonly met within this branch turn on counting the number of ways in which events can occur.
For example, what is the probability that three coins being tossed will all show heads?
There are 8 possible results; the probability of three heads is p=⅛
In trading, the number of ways events can occur is often too numerous to count. This is even further complicated when myriad technical indicators and strategies are thrown into the mix. Still, perhaps we can use the direct theory of probability on ourselves, on our behaviour - what is the probability that we will cut our losing trades whilst they are still small? If we don’t care too much about being wrong = always.
To succeed at this game, we must ensure that we are winning more than we are losing over the set of all trades. I don’t think the answer to this problem is correctly identifying the next coin flip; the answer is to make sure that our winning trades are bigger, much bigger, than our losing trades, and we can achieve this through the understanding and practical application of combinations and permutations.
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