Is it possible to increase the mathematical expectation?

MrAgi1 said:
I believe every randomly entered trade(buy or sell) of an asset or option is objectively a zero expected value trade(fair pricing). If that’s not the case, why would anyone enter the market and take the opposite side of your trade?

Ofcourse, we can say some form of technical/fundamental analysis gives us an edge by timing our entry(instead of random) but that is just subjective. Simply put, I see the market as an almost complete random walk. It’s hard to prove that timed market entry is any better than a random coin flip.

Example: I buy eurusd(randomly) with a take profit of 25pips and Stop loss of 75pips. Are you telling my win-rate would still be 50/50? I expected my win rate to be 75%, bring me expected value to zero.
{25pips*75%-75pips*25%=0 pips}
Well someone might say that based on TA, that by not entering trades randomly, the above trade is still a 50/50 win-rate but again that’s subjective.

Now imagine I have a coin that heads have a 75% chance of showing up(biased). I bet on heads and every time I loose $1 or make $1, why would anyone take the other side of that bet? That’s similar to my eurusd example above(random work), isn’t it? I am looking at the market from same perspective .

I don’t know if you understand my point?
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No I think you are confusing zero expected value with zero excess profit due to price efficiency theory but in reality that's not the case. There are excess profit to be made thus the expected value of each trade is definitely not zero. And to be profitable, it's not just the win rate that matters. It's also how much you win vs. how much you lose on each trade. If your win rate is 50/50, but each time you win, you can win twice as much as you lose, you still come out ahead.
 
syswizard said:
That's a helluva an article....but it went right over my head. I didn't even understand the "opening" vs. "closing" comparison. Perhaps I need to buy one of his books.
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A market is open before an event,
Odds are then opened for the bettors.
Opening quotations aren’t really efficient.

By efficient I mean …
forward probabilities = backward probabilities

Before the event takes place or end,
Betting is shut down. The close is the last quote.

We can see the closing quotations to be much more reliable in terms of predicting the outcome.

The difference between the open and the close,
Are the bettors pricing more and more information.

While the opening quotes are based solely on the brokerage’s own heuristics.

That’s why professionals are trying to beat the close. They look for value bets.

If they buy something with an implied probability of 1/2 but it actually closes with an implied probability of 2/3 then they’ve earned 16% on their bet.

That’s true even if they lose.
It’s a probability game.

As long as you beat the close …
Whatever the outcome. You’re doing fine.

That’s the same in financial market.
You’ve got an open and a close.

If you can buy lower than the close it’s fine.
If you can sell higher than the close it’s fine.
 
TheDawn said:
Didn't realize it was a "knock knock" joke. Sorry. Thought was a serious discussion of OP's question.
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it was a serious response done with (what I thought) was a succinct colorful analogy. The kind that would have made mark Twain proud.
 
TheDawn said:
No I think you are confusing zero expected value with zero excess profit due to price efficiency theory but in reality that's not the case. There are excess profit to be made thus the expected value of each trade is definitely not zero. And to be profitable, it's not just the win rate that matters. It's also how much you win vs. how much you lose on each trade. If your win rate is 50/50, but each time you win, you can win twice as much as you lose, you still come out ahead.
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Yes I am definitely confused about that topic. What the difference between zero expected value and zero excess profit?
 
vincentnyc said:
Let me look at stats from my sports betting journal right now. I started my sports betting this year on 1/30/22. I have made 149 sport bets so far…and I’m green ytd. You looking at one right now.
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uhh no. But you are green alright.
 
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