A concept that changed my trading.
The Law of Large Numbers:
The Law of Large Numbers:
In 2022, casinos made $60.42 billion,
They did this by exploiting multiple mathematical concepts,
But the key was the "Law Of Large Numbers".
How does this link?
In trading, you don't want to be the player you want be the house.
They did this by exploiting multiple mathematical concepts,
But the key was the "Law Of Large Numbers".
How does this link?
In trading, you don't want to be the player you want be the house.
To become the house,
Let's first define the concept:
The law of Large Numbers explains that as our sample size grows, the average of the sample gets closer to the average of the whole population.
The greater our sample size, the more certain we can be.
Let's first define the concept:
The law of Large Numbers explains that as our sample size grows, the average of the sample gets closer to the average of the whole population.
The greater our sample size, the more certain we can be.
Understanding the importance of a large sample size in trading is crucial.
For example with only 20 trades, having confidence in your strategy may be flawed.
Ideally, we should aim for 100s or 1000s of historical trades for accurate decision-making.
For example with only 20 trades, having confidence in your strategy may be flawed.
Ideally, we should aim for 100s or 1000s of historical trades for accurate decision-making.
Now this may not always be possible,
But understanding the risk is better than being exposed to it unknowingly.
There is a good reason why it is called the "law" of large numbers,
As without amble sample size probabilities are almost pointless.
But understanding the risk is better than being exposed to it unknowingly.
There is a good reason why it is called the "law" of large numbers,
As without amble sample size probabilities are almost pointless.
If you want to explore 3 other mathematical concepts key to improving your trading.
Here's each one broken down simply:
Here's each one broken down simply:
While many traders are focused on using discretion,
These mathematical concepts have been key to my improvement.
I hope they help you too.
If you find this type of content valuable & want more every week:
1. Follow me @GoshawkTrades for more.
2. Jump to the top & retweet.
These mathematical concepts have been key to my improvement.
I hope they help you too.
If you find this type of content valuable & want more every week:
1. Follow me @GoshawkTrades for more.
2. Jump to the top & retweet.
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