They got the maths all wrong...

[earth_imperator]

Can somebody tell why "they" clearly use wrong maths? Take a look at the normal distribution curve:
They label the peak with 0.4 instead of 0.5. Why do all do it so wrong? A typical copy/paste error?
https://en.wikipedia.org/wiki/Statistics#/media/File:Standard_Normal_Distribution.png

Same error here:
https://en.wikipedia.org/wiki/Normal_distribution#/media/File:Standard_deviation_diagram.svg

 

[longandshort]

The height of the mode in a normal distribution is approx 0.4/sigma.

 

[earth_imperator]

The height of the mode in a normal distribution is approx 0.4/sigma.

But the probability p for above or below mean (ie. z=0, aka 0SD, ie. 0 sigma) is 0.5, and in such a graph that real-world intuitive fact should be depicted, IMO.

 

[longandshort]

But the probability p for above or below mean (ie. z=0, aka 0SD, ie. 0 sigma) is 0.5, and in such a graph that real-world intuitive fact should be depicted, IMO.

If you set x = mu you’ll get it. It’s a labeling issue, the y axis is /sigma

 

[cruisecontrol]

But the probability p for above or below mean (ie. z=0, aka 0SD, ie. 0 sigma) is 0.5, and in such a graph that real-world intuitive fact should be depicted, IMO.

It does not follow from the probability above/below the mean being 0.5, that the peak of the graph would be at 0.5 on the Y axis.
Try evaluating the PDF for sigma=1, you should see that the graphs are correct.

 

[earth_imperator]

If you set x = mu you’ll get it. It’s a labeling issue, the y axis is /sigma

In my understanding and toolbox:
z2p(0) = 0.5 (ie. converting "z to p" (ie. the CDF), where z stands for z SD's), and the inverse of it:
p2z(0.5) = 0
S.a. https://en.wikipedia.org/wiki/Standard_normal_table

 

[cruisecontrol]

In my understanding and toolbox:
z2p(0) = 0.5 (ie. converting "z to p" (ie. the CDF), where z stands for z SD's), and the inverse of it:
p2z(0.5) = 0
S.a. https://en.wikipedia.org/wiki/Standard_normal_table

Right, so if you made a graph of the CDF, it would be Y=0.5 at 0.

The graphs you posted aren't graphs of the CDF, they are of the PDF.

 

[Overnight]

Can somebody tell why "they" clearly use wrong maths? Take a look at the normal distribution curve...
View attachment 318367

Why do you have this predilection of finding perceived faults in everything math related? First BSM was all wrong and then you kept telling every brokerage out there vicariously that they were calculating put margins wrong. Wrong wrong wrong.

Now this. Distribution calculations, having been used for centuries, are wrong. Wrong wrong wrong.

Can't you just accept that "they" are correct and it is YOU that has the problem?

 

[TheDawn]

Why do you have this predilection of finding perceived faults in everything math related? First BSM was all wrong and then you kept telling every brokerage out there vicariously that they were calculating put margins wrong. Wrong wrong wrong.

Now this. Distribution calculations, having been used for centuries, are wrong. Wrong wrong wrong.

Can't you just accept that "they" are correct and it is YOU that has the problem?

Because his ego tells him he is a math genius. Everybody must be wrong and he must be correct. LOL But he's entertaining and we need as much cheap entertainment as we can get.

 

[hilmy83]

Yes it's funny the way he approaches it. Instead of saying "can you guys explain why this is so and so", he goes "this is wrong because it doesn't fit my understanding".

It's interesting look into the guy's ego. Wondering how his trading journey is shaped by that too.