Coin Flip.

[WDGann]

Yes... bet sizing...

Taking the rules further:

1. A 50% profitable system.

2. Payout is 1:1.

3. No commissions.

Putting the popular % risk model using 10 % ( Set value of 10 unit ):

Trade 1: Win = +10 = 110 units ( 110 )
Trade 2: Loss = - 11 = 99 units ( 100 )
Trade 3: Win = + 9.9 = 108.9 units ( 110 )
Trade 4: Win = +10.89 = 119.79 units ( 120 )
Trade 5: Win = +11.979 = 131.769 units ( 130 )
Trade 6: Loss = - 13.1769 = 118.5921 units ( 120 )
Trade 7: Loss = - 11.8592 = 106.7329 units ( 110 )
Trade 8: Loss = - 10.6732 = 96.0597 units ( 100 )

or let's reverse the order of Win and Loss:

T1: Loss = -10 = 90 units ( 90 )
T2: Win = +9 = 99 units ( 100 )
T3: Loss = -9.9 = 89.1 units ( 90 )
T4: Loss = -8.91 = 80.19 units ( 80 )
T5: Loss = -8.019 = 72.171 units ( 70 )
T6: Win = +7.2171 = 79.3881 units ( 80 )
T7: Win = +7.9388 = 87.3269 units ( 90 )
T8: Win = +8.7326 = 96.0595 units ( 100 )

Well...

How can you win with a 50/50 Coinflip system?

 

[Gordon Gekko]

Quote from WDGann:

Yes... bet sizing...

Taking the rules further:

1. A 50% profitable system.

2. Payout is 1:1.

3. No commissions.

Putting the popular % risk model using 10 % ( Set value of 10 unit ):

Trade 1: Win = +10 = 110 units ( 110 )
Trade 2: Loss = - 11 = 99 units ( 100 )
Trade 3: Win = + 9.9 = 108.9 units ( 110 )
Trade 4: Win = +10.89 = 119.79 units ( 120 )
Trade 5: Win = +11.979 = 131.769 units ( 130 )
Trade 6: Loss = - 13.1769 = 118.5921 units ( 120 )
Trade 7: Loss = - 11.8592 = 106.7329 units ( 110 )
Trade 8: Loss = - 10.6732 = 96.0597 units ( 100 )

or let's reverse the order of Win and Loss:

T1: Loss = -10 = 90 units ( 90 )
T2: Win = +9 = 99 units ( 100 )
T3: Loss = -9.9 = 89.1 units ( 90 )
T4: Loss = -8.91 = 80.19 units ( 80 )
T5: Loss = -8.019 = 72.171 units ( 70 )
T6: Win = +7.2171 = 79.3881 units ( 80 )
T7: Win = +7.9388 = 87.3269 units ( 90 )
T8: Win = +8.7326 = 96.0595 units ( 100 )

Well...

How can you win with a 50/50 Coinflip system?

with 50/50 win/loss and payoff 1:1, no amount of money management will make this make money.

 

[bdixon619]

I use a coin flip classification as part of a larger overall view of the market. Say you can classify the market into one of four states. Then the coin flip will give you additional information about the likelihood of the current market state remaining the same or changing to another state.

Yes, the probability of an individual flip is only 50/50; however when you link the coin flip with a market state you gain a small informational edge in determining if the current market state will continue or not. This edge is the result of the current state transitioning to another state or remaining 'attracted' to the state in which it is currently resting.

I view the market in somewhat the same way as someone viewing a Lorenz attractor would view it.

http://astronomy.swin.edu.au/~pbourke/fractals/lorenz/

 

[pspr]

Quote from WDGann:

Well...

How can you win with a 50/50 Coinflip system?

There are only two ways.

1. Win amount must be greater than loss amount per bet. If it approches reliably 2:1 at all times you will have all the money in the world in short order using a simple "percent of equity" wager method.

or

2. Double each bet after a loss. Of course you eventually will need more money than is available in the world to make the next bet.

Monte Carlo and all other progressive betting systems are worthless but look deceptivley viable. The same as trying to create energy, "Energy can neither be created nor destroyed". But energy CAN be converted to mass and visa versa.

 

[WDGann]

Quote from bdixon619:

I use a coin flip classification as part of a larger overall view of the market. Say you can classify the market into one of four states. Then the coin flip will give you additional information about the likelihood of the current market state remaining the same or changing to another state.

Yes, the probability of an individual flip is only 50/50; however when you link the coin flip with a market state you gain a small informational edge in determining if the current market state will continue or not. This edge is the result of the current state transitioning to another state or remaining 'attracted' to the state in which it is currently resting.

I view the market in somewhat the same way as someone viewing a Lorenz attractor would view it.

http://astronomy.swin.edu.au/~pbourke/fractals/lorenz/

 

[Thunderdog]

Quote from WDGann:

Yes... bet sizing...

Taking the rules further:

1. A 50% profitable system.

2. Payout is 1:1.

3. No commissions.

Putting the popular % risk model using 10 % ( Set value of 10 unit ):

Trade 1: Win = +10 = 110 units ( 110 )
Trade 2: Loss = - 11 = 99 units ( 100 )
Trade 3: Win = + 9.9 = 108.9 units ( 110 )
Trade 4: Win = +10.89 = 119.79 units ( 120 )
Trade 5: Win = +11.979 = 131.769 units ( 130 )
Trade 6: Loss = - 13.1769 = 118.5921 units ( 120 )
Trade 7: Loss = - 11.8592 = 106.7329 units ( 110 )
Trade 8: Loss = - 10.6732 = 96.0597 units ( 100 )

or let's reverse the order of Win and Loss:

T1: Loss = -10 = 90 units ( 90 )
T2: Win = +9 = 99 units ( 100 )
T3: Loss = -9.9 = 89.1 units ( 90 )
T4: Loss = -8.91 = 80.19 units ( 80 )
T5: Loss = -8.019 = 72.171 units ( 70 )
T6: Win = +7.2171 = 79.3881 units ( 80 )
T7: Win = +7.9388 = 87.3269 units ( 90 )
T8: Win = +8.7326 = 96.0595 units ( 100 )

Well...

How can you win with a 50/50 Coinflip system?

The only way you can win in the proposed scenario is by being very, very lucky. And if you can assume that, then you may as well use the coin to buy a lottery ticket.

 

[traderkay]

WD, you seem like you think you know the answer and you're toying with those who reply to thread. Stop being an AB and lay it out on the table, wont you? U're disgusting.

 

[traderkay]

There's something I call "zero edge reversion" tendency. Meaning if you got 50/50 with 1/1 payoff edge is 0. Now you try to be smart and incrase pay off to 2/1. what tends to happen is the win % drops to 33/66 and once again you're at 0 expectancy.

 

[Pabst]

Quote from traderkay:

There's something I call "zero edge reversion" tendency. Meaning if you got 50/50 with 1/1 payoff edge is 0. Now you try to be smart and incrase pay off to 2/1. what tends to happen is the win % drops to 33/66 and once again you're at 0 expectancy.

Exactly.

 

[Brutus]

Quote from traderkay:

There's something I call "zero edge reversion" tendency. Meaning if you got 50/50 with 1/1 payoff edge is 0. Now you try to be smart and incrase pay off to 2/1. what tends to happen is the win % drops to 33/66 and once again you're at 0 expectancy.

Since the market has a fat tailed distribution of returns I'm wondering if there would be a slight edge if you used a payoff of 10/1 or higher to try and grab an occasional large return? The win % should be 9/91 but maybe it would be better because of the fat tails.