Reality based coin-tosser method that beats 95% of traders in the world.

Quote from AyeYo:



Listen, I get what you're trying to do and the thread concept is great. But if you're going to be a dick to people trying to offer suggestions, I figured someone should at least point out that your basic premise is flawed.
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The only flaw is in your brain that can't distinguish between the probability of your decision method and the historical returns of a market. In this case the SP500.

If you haven't got it yet, I don't care.
 
Quote from AyeYo:

Yea, I get that. You're saying break-even MINUS costs, I get that. I left off the minus costs to simplify and save myself typing.

You're saying it's break-even before costs? Prove it.
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Breakeven in expectation over the very long run if you had no costs. If you go bust in the short run, then the long run does not apply, does it?
 
Quote from Badoit:

which is more likely:

i) Tomorrow, the SPX will close at 2 times its present value

ii) Tomorrow, the SPX will close at 0
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The most likely outcome is that you will lose money. That is, if you place a trade.
 
Quote from Whisky:

It doesn't have to even out. Over a large number of samples the expectation converges to a loss equal to commissions and slippage. If you don't understand the mathematical proof, I can suggest you make a Montecarlo test and see it converge in front of your eyes.

Every outcome is 50-50 that's all the coin does. The payoff is positive or negative whatever amount. The expectation is 0. And then you substract commissions and slippage.

Maybe someone else can explain it better?.
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Don't see how. That was perfect.
What I want to know is this: what's the Z in LMAZO?
 
Quote from Whisky:

Breakeven in expectation over the very long run if you had no costs. If you go bust in the short run, then the long run does not apply, does it?
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If you go bust in the short run, you are still bust in the long run and you don't beat 95% of traders. Expectancy is breakeven minus costs only when the probability of going bust is vanishingly small. You need a large trading account in addition to your big pile of coins.
:)
 
Quote from Whisky:

EV of first toss: 0.5 X - 0.5 X -costs
EV of second toss: 0.5 Y - 0.5 Y-costs
...
EV of Nth toss: 0.5 N - 0.5 N-costs

Sum of EV: 0 - sum of costs

X, Y, ..., N are what you call the size of wins and losses.

That's the best I can do. Good night.

p.s.: EV is "Expected value".
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... actually the market's expectancy isn't zero; check the options' model ... somebody took the Nobel for it ... and no, his name doesn't start with "O"

... in long run your coin toss approach will loose more than you've estimated, function of interest rates

... the market isn't random, and you can't approximate it with a coin toss even for a large number of samples

... I guess you knew all of these and just wanted to have fun on ET's crowd expense :)
 
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