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Strategies & Market Trends : ahhaha's ahs

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To: Ilaine who wrote (444)	11/6/2000 9:54:18 AM
From: Wayners	Read Replies (1) of 24758

I once read an analogy which I think makes ahhaha's point much plainer - take a thousand people and let them toss a coin. The coin toss analogy is invalid. For the coin toss analogy to work so you can apply the same mathematical probabilities to trading, you first have to demonstrate that the coin toss 100% accurately models trading. I can show on the micro level that coin tosses cannot model trading. The coin toss analogy is that if you flip a head you move up one and if you toss a tail you move down one--so on the micro level "price" can never ever say at exactly the same level or "price". Its always either moving up one or moving down one. In trading, price can easily stay at the same level and does not have to move. Seems to me there is a big problem with the coss toss model. How does the coin toss account for no heads and no tails event?

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