![]() ![]() When we trade our first 10 trades might not produce the outcome we expect to see over 1,000 trades. Playing the coin toss game 1 million times, the distribution will be far closer to 50/50 (heads/tails) than what we find in a smaller "sample". What's important to understand here is that playing the coin toss game 1 million times, the distribution will be far closer to 50/50 (heads/tails) than what we find in a smaller "sample". Can we expect 8 tails and 2 heads again? Perhaps, although the distribution might be 6 heads and 4 tails in this sample. Tossing the coin a further 10 more times would be sample 2. ![]() Tossing this 10 times would be classed as 1 sample. If you toss that coin 10 times your distribution of heads and tails outcome could be 8:2 (in favour of tails). Ever heard of it? Think of a 2 sided coin. So how can it predict possible outcomes based on your past trades? The law of large numbers theory. In the most simplistic way, the Monte Carlo simulation works on the theory that the best estimate of your future performance is derived from your past trades. How does the Monte Carlo Simulation work? You need tested strategies, powerful tools, and experienced traders to arm you with knowledge. You need tested strategies, powerful tools, andĮxperienced traders to arm you with knowledge. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |