Tossing a coin 500 times

[rols]

Chart of 10,000 ******s

JT - keep tossing - a little way to go :cheesy:

http://www.trade2win.com/boards/technical-analysis/9827-chart-10-000-coin-tosses.html

 

[rols]

JT - keep tossing - a little way to go :cheesy:

http://www.trade2win.com/boards/technical-analysis/9827-chart-10-000-coin-tosses.html

Can't believe the censor has xxxx out toss_ers

What do you call people who play with balls for instance?

 

[dbphoenix]

Can't believe the censor has xxxx out toss_ers

What do you call people who play with balls for instance?

Content?

 

[rols]

Content?

Boom Boom!

Are you referring to that very British pastime called Pocket Billiards by any chance?

 

[THE WOLF2222]

If you could flip the coin an infinite number of times, in theory, there is no guarantee of heads (or tails) ever coming up, it is only probable.

 

[Lee Shepherd]

Interesting but proven theory

The coin tossing theory is a good one and has been associated with technical graphs for many years.

In principle the more times you flip a coin the closer it will get to being 50-50.

This theory is based on an individual person with no mechanical aids or manipulation, trickery or machine. It can however be used under any circumstances, randon rooms, temperature, weather conditions ect. If unsure then reach for a coin and try it keeping notes of the flips.

This is where graphs, moving averages(MA), market strength(RSI) ,fear ,greed and probability can be taken advantage of in the markets.

Now in theory theres no law to say I cannot flip a coin and get heads 100 times, however, this is unlikely to the extent of impossible over many lifetimes of constant flipping. It's not to say it wont happen but it's improbable.

The coin theory exercise can be applied to the markets just as it can be used for the markets, for example the markets being overbought/sold.

If I were to flip a coin day in day out it's likely that at some point during the day/week month I'll flip 8 heads in a row, now although in theory the next flip has a 50% chance of being tails, the probability of this is far lower as over time I must get 50% heads to tails. So, probability of the next flip becomes more in the favour of being tails. If not the next flip, or the next flip and so on.

Just like trading a particular index it will have highs and lows, moving averages, over bought and oversold conditions. These too can be taken advantage of using this method.

Again another example for trading days is (albeit crude and simple), if theres been 4 down days then the next day has a higher chance of closing positive, if not the next day and so on. Of course if this doesn't happen the market will collapse. Once again in principle theres nothing to say that an index or market cannot reach zero(collapse) just the same as it could reach 1 million, however, once again this is unlikely therefor giving an automatic edge(albeit slight and crude) to trading the markets.

The above method of coin tossing is not something I use nor reccomend. It's just a theory in principle that will help one to understand how the market indexes can work in relation to flipping a coin.

 

[JTrader]

I watched Derren Brown - The System (horse-racing) - a few weeks ago

He did a coin tossing experiment, trying to get 10 heads (or was it tails?) in a row, flipping it into a bowl. It took a whole day of filming to achieve this, around 9-10 hours - but he got their in the end.....but he couldn't even see the bowl at one point as it was such hard work.....Obviously in the program, he made it look/sound like he could do it at will, as though it wasa skill that he had secretly acquired.......b4 explaining how "The System" worked in the end.........

 

[Lee Shepherd]

It would be interesting to know how many more hours even possibly days or even weeks it would take for him to get 11 heads.

The case still remains that if you were there with him those 9-10 hours and placed bets on the 5,6 or 7th flip and continued to double your bet or average out then you'd have been quids in against him. How many flips must he had have done, it would have course been many thousands before getting what he wanted. Just the same as a trader at some point will have a catastophy when trading, ie, stock market crashes.

 

[fat chance]

If I were to flip a coin day in day out it's likely that at some point during the day/week month I'll flip 8 heads in a row, now although in theory the next flip has a 50% chance of being tails, the probability of this is far lower as over time I must get 50% heads to tails.

Don't you wonder how the laws of physics and/or the material properties of the coin manage to alter themselves in order to reduce the probability of the next flip being the same as the previous 8?

 

[Lee Shepherd]

Eh? you've confused me..I'm a very simple guy..would be so kind as to elaborate a little.

Don't you wonder how the laws of physics and/or the material properties of the coin manage to alter themselves in order to reduce the probability of the next flip being the same as the previous 8?

 

[fat chance]

Eh? you've confused me..I'm a very simple guy..would be so kind as to elaborate a little.

Sorry, I was being a bit sarcastic and pulling you up on the error in your post which you may not even have meant.

If it's an unbiased coin, the probability of getting a tail is always 50%, independent of how many consecutive tails you've just thrown: the coin and the laws of physics have no memory of what has gone before. The ratio of tails to heads tossed will get closer to 50:50 with a large number of tosses if it's an unbiased coin, but the difference between the total number of heads and the total number of tails you have tossed can (and is likely to) increase. This fact is massively relevant to trading - neglecting transaction costs and bid/ask spreads, random traders are not expected to break even over a large number of trades, even if the market is a random walk.

 

[Lee Shepherd]

Absolutley,

with regards to breaking even, I was on about a probable strat which again in theory has no edge or meaning whatsoever. It is determined however that if a trader sits out and waits for massive directional indications, ie, the markets go unexpectedly up or down then providing the position is correct the trader will have a better than average success. Of course this is always how the markets work in respect to panicking and taking profit too soon or hitting stops too soon, or too late.

The theory in principle has to be adapted to ones own style and be consistant with it, but the fact still remains that if patience is applied with sense then this will in turn give a natural edge against the natural panic and greed of most that play the markets for a fast buck.

This is by no means the be all and end all, it's not even a start but is certainly an indication of where to begin.

 

[Gumping]

50:50

Hmmmmm....maybe I'm being pedantic....but....

The two faces of the coin are different - so why is there a 50:50 chance on the outcome? If you can tell the difference between the two faces on the coin, then they must each affect the coin's trajectory through the air differently as it is being flipped. The different weights of each side may also affect the way the coin lands.

Do we have any examples of a 50:50 outcome with flipping? How many flips did it take to get it? Is it valid for all different coins? Are the probabilities different for each coin?

I just think that the only way of getting a 50:50 outcome is if the two faces of the coin are identical - in which case, the outcome could not be measured.

 

[Mathemagician]

Do we have any examples of a 50:50 outcome with flipping?

Yes, several.

How many flips did it take to get it?

2

jj

 

[Gumping]

Yes, several.2

jj

 

[GMP]

I watched Derren Brown - The System (horse-racing) - a few weeks ago

He did a coin tossing experiment, trying to get 10 heads (or was it tails?) in a row, flipping it into a bowl. It took a whole day of filming to achieve this, around 9-10 hours - but he got their in the end.....but he couldn't even see the bowl at one point as it was such hard work.....Obviously in the program, he made it look/sound like he could do it at will, as though it wasa skill that he had secretly acquired.......b4 explaining how "The System" worked in the end.........

Anyone interested in establishing the veracity of a trading system should have watched Derren Brown's Trick or Treat on C4 last Friday night (6June08) - it's repeated this week on Thursday 12th at 11pm. There's a very interesting experiment demonstrating how we can misinterpret our interaction with reality.
Anyone with a trading technique yielding market entries with a 50% or less win-loss ratio should watch the repeat and ask himself if the technical indicators he's using are actually nothing more than a very sophisticated from of superstition, whose complexity is only serving to give him a very convincing illusion of control.
Watch it with an open mind and be honest with yourself!

 

[trendie]

Rather than wait for a scheduled programme, you can log onto Channel 4s On-Demand service, and watch it/download it at your convenience.
4oD - Channel 4's TV and Film on Demand service
(download of software required)

Streaming TV! no more missed programmes. best thing since sliced bread.
I'll be watching it probably lunch-time tomorrow.

 

[GMP]

The coin tossing theory is a good one and has been associated with technical graphs for many years.

In principle the more times you flip a coin the closer it will get to being 50-50.

This theory is based on an individual person with no mechanical aids or manipulation, trickery or machine. It can however be used under any circumstances, randon rooms, temperature, weather conditions ect. If unsure then reach for a coin and try it keeping notes of the flips.

This is where graphs, moving averages(MA), market strength(RSI) ,fear ,greed and probability can be taken advantage of in the markets.

Now in theory theres no law to say I cannot flip a coin and get heads 100 times, however, this is unlikely to the extent of impossible over many lifetimes of constant flipping. It's not to say it wont happen but it's improbable.

If I were to flip a coin day in day out it's likely that at some point during the day/week month I'll flip 8 heads in a row, now although in theory the next flip has a 50% chance of being tails, the probability of this is far lower as over time I must get 50% heads to tails. So, probability of the next flip becomes more in the favour of being tails. If not the next flip, or the next flip and so on.

That's not the case Lee - the prior sequence of flips has no bearing on the probability of the next flip whatsoever.
e.g. Three coin flips can produce the sequences:
H-H-H, H-H-T, H-T-H, H-T-T, T-H-H, T-H-T, T-T-H, T-T-T
and each sequence has exactly the same probability of occurring whether it's three of a kind or a mixture. This holds true irrespective of the number of coinflips. 50 heads on the trot has exactly the same probability of occurring as any combination in any sequence, and has no bearing on the next coin-flip whatsoever.
There is no law that says you must get 50% heads and tails over time - that's a reasonable supposition but an abstract thought: the coin doesn't know what's preceded its current flip and the probability will always be 50% for either side with each flip, regardless of whether it's the first flip or the thousandth.

Graphs and moving averages are a different matter though, and I'd agree this sort of thinking can be useful there. It's just that the coinflip analogy doesn't really work.

 

[Trader333]

If I were to flip a coin day in day out it's likely that at some point during the day/week month I'll flip 8 heads in a row, now although in theory the next flip has a 50% chance of being tails, the probability of this is far lower as over time I must get 50% heads to tails. So, probability of the next flip becomes more in the favour of being tails. If not the next flip, or the next flip and so on.

Lee,

This is known as "Gamblers Fallacy" and it can be searched for on Google. It is the belief by many gamblers that because they have had a long sequence of losses then their odds of a win must be have increased but this is scientifically proven to be false. As GMP states the odds are no different on any toss of a coin other than 50 / 50 regardless of how many previous heads or tails have been obtained.


Paul