Discussion of article "Combinatorics and probability theory for trading (Part I): The basics"
Very interesting material! Thank you!
In contest of probability, implementation of Hidden Markov Chains in trading are promised too! Just a comment :)!
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
New article Combinatorics and probability theory for trading (Part I): The basics has been published:
In this series of article, we will try to find a practical application of probability theory to describe trading and pricing processes. In the first article, we will look into the basics of combinatorics and probability, and will analyze the first example of how to apply fractals in the framework of the probability theory.
This example is close to the market. It calculates the probability that out of n steps the market will move u steps up. A step is the price movement at a certain number of points up or down, relative to the previous step. The graphical array of probabilities for each "u" can be shown as follows:
For simplicity, I used a Bernoulli scheme with 10 steps. The file is attached below, so you can test it. You do not necessarily need to apply this scheme to pricing. It can also be applied to orders or anything else.
Author: Evgeniy Ilin