Comments on: The Face of Regret http://martinkronicle.com/2010/01/07/the-face-of-regret/ Insight from a Professional Trader Fri, 27 Jan 2012 18:37:00 +0000 hourly 1 http://wordpress.org/?v= By: Anonymous http://martinkronicle.com/2010/01/07/the-face-of-regret/comment-page-1/#comment-671 Anonymous Mon, 01 Nov 2010 12:25:00 +0000 http://martinkronicle.com/?p=1127#comment-671 It is not. Each flip itself is 1/2 or 50% probability. To calculate the probability of a "long run" in flipping heads, you'd have to multiply the probability of flipping heads for each successive flip. Here's an example of a moderate run of 5 consecutive flips coming up heads: .5 x .5 x .5 x .5 x .5 = .03125 or 3.125%, making the odds 31:1 against - I'd say unlikely. .5 = probability of 1 head .5 x .5 = probability of 2 heads in a row = .25 or 25% .5 x .5 x .5 = 12.5% .5 x .5 x .5 x .5 = 6.25% .5 x .5 x .5 x .5 x .5 = 3.125% So if you bet me that you'd get a run of 5 heads in a row, 96.875% of the time when you flipped the coin 5 times, you would not achieve the outcome. Notice you only need the first flip to come up tails to bust on that particular group of 5 tosses. The remaining four don't matter when the first one does not meet your criteria. Only in 3.125% of your "group of 5 flips" would you achieve 5 in a row. Hope that helps. It is not. Each flip itself is 1/2 or 50% probability.

To calculate the probability of a “long run” in flipping heads, you’d
have to multiply the probability of flipping heads for each successive
flip. Here’s an example of a moderate run of 5 consecutive flips coming
up heads:

.5 x .5 x .5 x .5 x .5 = .03125 or 3.125%, making the odds 31:1 against
- I’d say unlikely.

.5 = probability of 1 head

.5 x .5 = probability of 2 heads in a row = .25 or 25%

.5 x .5 x .5 = 12.5%

.5 x .5 x .5 x .5 = 6.25%

.5 x .5 x .5 x .5 x .5 = 3.125%

So if you bet me that you’d get a run of 5 heads in a row, 96.875% of
the time when you flipped the coin 5 times, you would not achieve the
outcome. Notice you only need the first flip to come up tails to bust on
that particular group of 5 tosses. The remaining four don’t matter when
the first one does not meet your criteria.

Only in 3.125% of your “group of 5 flips” would you achieve 5 in a row.

Hope that helps.

]]> By: Sam http://martinkronicle.com/2010/01/07/the-face-of-regret/comment-page-1/#comment-670 Sam Mon, 01 Nov 2010 12:02:00 +0000 http://martinkronicle.com/?p=1127#comment-670 Michael, the notion that a long run of flipping heads is improbable is fallacious, is it not? Every flip is exactly 50/50 right? Is that the point you are making in terms of the power of the trend? Michael, the notion that a long run of flipping heads is improbable is fallacious, is it not? Every flip is exactly 50/50 right? Is that the point you are making in terms of the power of the trend?

]]> By: Charles http://martinkronicle.com/2010/01/07/the-face-of-regret/comment-page-1/#comment-443 Charles Thu, 07 Jan 2010 20:20:48 +0000 http://martinkronicle.com/?p=1127#comment-443 “Those who have knowledge don’t predict. Those who predict don’t have knowledge.”<br>- Lau Tzu<br><br>“Why do people think they’re smarter than the market long-term? What gives them that confidence? I guess people feel dumb if they can’t predict what the market is going to do in the short term. They’re too proud to admit they don’t know what to do when they’re wrong. They don’t have the capacity to understand the digits that are scrolling by on the bottom of the television. I don’t. It’s too much noise. That’s why we rely on our system.”<br>-Bill Dunn<br><br> “Those who have knowledge don’t predict. Those who predict don’t have knowledge.”
- Lau Tzu

“Why do people think they’re smarter than the market long-term? What gives them that confidence? I guess people feel dumb if they can’t predict what the market is going to do in the short term. They’re too proud to admit they don’t know what to do when they’re wrong. They don’t have the capacity to understand the digits that are scrolling by on the bottom of the television. I don’t. It’s too much noise. That’s why we rely on our system.”
-Bill Dunn

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