SKILL or LUCK???

G

George Canuck

Requesting the help of those mathematically inclined...

Assuming a fair coin, what is the probability of getting 86 heads (non-consecutive) from 132 coin tosses?

I don't know the answer though I do know its not a matter of simple division. One would expect a fair coin to return 66 heads and 66 tails. In the extreme, a fair coin COULD return 132 heads and 0 tails... but presumably such odds would be astronomical.

I ask because I want to compare my two year trading performance (86 wins, 46 losses... avg. win $ 3,800 and avg. loss $ 4,200) against results that could be achieved just by pure chance or luck.

Your help and/or insights would be most appreciated. Thanks!
 
S777's is right. Trading is not the same.

To get the same result for coin toss does require some skill. You have to do it in a environment that does not have any wind. Use the same amount of strength to flip the coin. Flip it exactly the same way as previously flipped. Have it land and Not spin, etc.. and even then the probability is still 50/50.
 
sumfuka said:
S777's is right. Trading is not the same.

To get the same result for coin toss does require some skill. You have to do it in a environment that does not have any wind. Use the same amount of strength to flip the coin. Flip it exactly the same way as previously flipped. Have it land and Not spin, etc.. and even then the probability is still 50/50.
More...

+1

Unfortunately those that don't understand what you have said are still convinced trading and coin toss are the same when its NOT.

Simply, to be a profitable trader requires skill, experience, trading plan and many other variables that a simple coin toss can not duplicate. Yeah, sure, once in awhile someone puts in a trade and get "lucky" to exit with a profit. Just the same, someone can put in a trade and get "unlucky" to exit with a loss (e.g. computer crashed while at profit but when it rebooted...trade had retraced and resulted as a loss).

My point, profitable traders are mainly via the variables mentioned above but they do have some (small percentage) trades that resulted as a profit via luck.
 
George Canuck said:
Requesting the help of those mathematically inclined...

Assuming a fair coin, what is the probability of getting 86 heads (non-consecutive) from 132 coin tosses?

I don't know the answer though I do know its not a matter of simple division. One would expect a fair coin to return 66 heads and 66 tails. In the extreme, a fair coin COULD return 132 heads and 0 tails... but presumably such odds would be astronomical.

I ask because I want to compare my two year trading performance (86 wins, 46 losses... avg. win $ 3,800 and avg. loss $ 4,200) against results that could be achieved just by pure chance or luck.

Your help and/or insights would be most appreciated. Thanks!
More...

If trading success were random chance/luck, then you have been lucky.

But trading is NOT that.

Trading is a skill. You are supposed to win if you do it at least reasonably well.

The primary reason people lose money in the markets is because they make errors... most of which they do not understand and are likely to repeat.
 
George Canuck said:
Requesting the help of those mathematically inclined...

Assuming a fair coin, what is the probability of getting 86 heads (non-consecutive) from 132 coin tosses?

I don't know the answer though I do know its not a matter of simple division. One would expect a fair coin to return 66 heads and 66 tails. In the extreme, a fair coin COULD return 132 heads and 0 tails... but presumably such odds would be astronomical.

I ask because I want to compare my two year trading performance (86 wins, 46 losses... avg. win $ 3,800 and avg. loss $ 4,200) against results that could be achieved just by pure chance or luck.

Your help and/or insights would be most appreciated. Thanks!
More...



As a rational type of person, a mathematician, and a scholar, do you believe that the above applies to all types of trading?
 
Thank you all for your valued feedback!

The purpose of my original post was to measure my trading performance versus pure luck or chance. (Unfortunately, I lack the mathematical acumen to derive the necessary calculation.)

Please note I do not equate trading with a coin toss. I believe one’s trading results are predominantly skill-based while the results of a coin toss are obviously purely luck. But if my trading performance was no better than 50-50, assuming equal values for wins versus losses, then my trading does not make financial sense. However, since my results are better than 50-50, I wanted to find out just how much better, mathematically speaking, since even a 60-40 result could be attributable to chance, not skill.
 
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