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Coin Toss Experiment (Strategy)
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Coin Toss Experiment (Strategy)

  #71 (permalink)
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Will it improve the edge if you increase/decrease the magnitude of a toss?

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No, assuming a fair coin or any normal PDF the magnitude will not affect the probability. Given any set of stops or targets the trade off between Risk Reward ratio and win rate will always remain. You can explore this yourself using a simple binomial model of prices. Cox rubenstein i believe for pricing and just set your levels. I did the experiment with historical data but it matches the theoretical academic model anyway.

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  #73 (permalink)
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treydog999 View Post
No, assuming a fair coin or any normal PDF the magnitude will not affect the probability. Given any set of stops or targets the trade off between Risk Reward ratio and win rate will always remain. You can explore this yourself using a simple binomial model of prices. Cox rubenstein i believe for pricing and just set your levels. I did the experiment with historical data but it matches the theoretical academic model anyway.

Then it`s probably best to just lay them out flat - tails or heads up!Why bother tossing?

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Cachevary View Post
Then it`s probably best to just lay them out flat - tails or heads up!Why bother tossing?

Sure, if you randomly lay out the coins with out tossing you would get the result. or if you picked black or white balls from a hat, or had your friend hold a 1 or 2 behind his back while upside down.

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Sure, if you randomly lay out the coins with out tossing you would get the result. or if you picked black or white balls from a hat, or had your friend hold a 1 or 2 behind his back while upside down.

Not laying out randomly,but the way that`s required.So if you have three coins lay them out the moment suggests,either three heads up or three tails up.

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Not laying out randomly,but the way that`s required.So if you have three coins lay them out the moment suggests,either three heads up or three tails up.

Still doesn't make a difference. since it is still a binary system 3 heads up or 3 tails up which simplifies to heads or tails.

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Still doesn't make a difference. since it is still a binary system 3 heads up or 3 tails up which simplifies to heads or tails.

What makes difference then?

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What makes difference then?

Nothing. The probability distribution is set, and the relationship is fixed. Any given winrate and RRR must approach 0 expectancy.

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Nothing. The probability distribution is set, and the relationship is fixed. Any given winrate and RRR must approach 0 expectancy.

so there`s no edge in probability,it turns out.Aren`t all the indicators about probability?


Last edited by Cachevary; January 1st, 2015 at 02:02 AM.
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Cachevary View Post
so there`s no edge in probability,it turns out.Aren`t all the indicators about probability?

No there is no edge in trade management, given a coin toss/ normally distributed time series. No indicator I know of is going to help you with this problem.

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