Having a zero sum game doesn't require a 50-50 split between winners and losers. Also stock prices follow geometric Brownian motion under the assumptions of Black-Scholes not a Gaussian distribution.
Why Is The Obvious Not So Obvious?
- Thread starter nysestocks
- Start date
Having a zero sum game doesn't require a 50-50 split between winners and losers. Also stock prices follow geometric Brownian motion under the assumptions of Black-Scholes not a Gaussian distribution.
Here's the index to mine
Define each sub heading clearly..., concisely.., and simply
Leave any mkt reference out of it - this is what YOU will do..., how YOU will do it..., when YOU will do it - repeatedly and consistently
Regardless of what the mkt is doing
RN
You betchca Sir
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Then - when trading - each trade gets a trade plan
Entry signal / price (entry signal should be appropriate for.., and within price's current context)
SL / PT (SL - set where the trade breaks down / signal invalidated..., PT should be appropriate for.., and within price's current context)
Means/ way of managing the trade
WRR
Off to the races we go
RN
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There is also OF and UP, although I've no idea which of the four JS was referring to.
The logarithmic returns, and the probabilities for winners/losers, are normally distributed (Gaussian), and since negative stock prices isn't possible, the net effect is a lognormal distribution.
Just do a simulation for 100 traders and 1000 trades each do: 50% of the trades will win, 50% will lose,
and that will be similarily distributed for the traders: 50% will have won, 50% will have lost...
Apologies, as I was getting setup to do a small trade on ES option.
I meant two words, of which there are a few, but as mentioned, you have to be there to do it!
Two words are closer to the bottom, than the top.
J_S