Discussion of article "Combinatorics and probability theory for trading (Part I): The basics"
I could only read the first 3 sections (up to the first picture) - I just got tired of re-reading each sentence 2 times, imho, after each sentence you can put a copyright sign (C) or copy it to WikiCitebook
ZY: or maybe it's a translation from a foreign country? - then a very mediocre translation, to put it mildly, the original is in what? - Albanian?
There are many ways to make money. You should not blame the author. Especially since it seems that such publications are in demand by the "editorial board".....
You are right, there will be 2 more at least, some of the material is already there, yes it is complicated, but useful, so that everyone understands everything is taken from my head and no translation. I don't use external sources at all, and if I do, I try to say it in my own words, but it happens very rarely. I can already see that such a branch will be in demand, if only because of the comments. Study carefully before trolling (I am not talking to you Michael, but to everyone else), the material is really useful from a practical point of view.
You are right, there will be 2 more at least, some of the material is already there, yes it is complicated, but useful, so that everyone understands everything is taken from my head and no translation. I don't use external sources at all, and if I do, I try to say it in my own words, but it happens very rarely. I can already see that such a branch will be in demand, if only because of the comments. Study carefully before trolling (I am not talking to you Michael, but to everyone else), the material is really useful from a practical point of view.
I'll read!
Oh, I remember how I passed a test on "TheorVeru".
Besides, our Rimma Ilyinichna didn't like me for being late, so instead of one she gave me two tasks:
1. Calculate the probability of an event;
2. On matstatistics.
I passed the test :)
Comment as you read:
- I would start with a coin flip - it's classic and very clear.
Well that's just so, no mean judgement.
Excellent!
Very much in favour, but:
1. For the future MTS it is necessary to limit:
a) the space of options itself, for example, to calculate the probability for not just up or down direction, but to take already more probable direction with the help of stochastic indicator (such an experienced assumption).
The movement itself for a certain period is expressed by an intention, leading for us or a local trend, which during the day can be expressed in only 5-10 bars out of, for example, 48 bars (30 min).
Accordingly, if one of the trades has a negative outcome after n steps, we continue to follow the intention, increasing the volume and the probability of a positive outcome out of the limited number of remaining
bars in the current trading day. "StopLoss" and "Taki Profit" will be equalised for beauty.
2. The previous state with another selected direction will not be touched, let it merge into the current one and end as the last order is realised.
Excellent!
Very much in favour, but:
1. For the future MTS it is necessary to limit:
a) the space of options itself, for example, to calculate the probability for not just up or down direction, but to take already more probable direction with the help of stochastic indicator (such an experienced assumption).
The movement itself for a certain period is expressed by an intention, leading for us or a local trend, which during the day can be expressed in only 5-10 bars out of, for example, 48 bars (30 min).
Accordingly, if one of the trades has a negative outcome after n steps, we continue to follow the intention, increasing the volume and the probability of a positive outcome out of the limited number of remaining
bars in the current trading day. "StopLoss" and "Taki Profit" will be equalised for beauty.
2. The previous state with another selected direction will not be touched, let it merge into the current one and end as the last order is realised.
Yes, we can do this, the problem is that we only think that there will be some continuation or reversal of the trend, all estimates are purely approximate, by eye. We only "think" that the indicator will give something, but it does not owe us anything. All we have is a loud name and the illusion that it should give something, but in reality it is "0". We need specific values, mathematical expectation, ratios of stops to each other. This maths can only help when there are clearly defined probabilities, and these can only be determined from trading statistics. This is the variability, in that this maths will only tell us what the probabilities of certain events are based on how well we have predicted the future. The quality of the prediction can only be described by trade statistics ). There are a lot of nuances that few people think about. For example, how much the trend will continue relative to the segment in which it is detected, how much its mathematical expectation will fall or on the contrary it will invert, there are so many white spots that it is better not to think about them if we still can use our reason ). I will try to show something really useful as far as I can. As for the indicator here everything is simple, we find probabilities, enter them into the model and get the answer ). But for this you need to get statistics first
The question of searching for an elementary structure (like an atom in physics or an element of the Mendeleev table in chemistry) has been posed quite correctly.
For financial market charts such a structure is found in the theory of impulse equilibrium. And it is M-form (fractal structure).
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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