On the Internet you can find many articles, where work on Forex identify with the game at the casino, such as roulette. Contributors have expressed a variety of reasons, leading the mathematics of probability theory, and often they do not understanding. In this chapter we will try to dispel the myth of belonging Forex gambling.
The game of roulette is as old as the world. It can be called one of the great inventions of mankind. The roulette and the rules of the game it is very simple. But behind the apparent simplicity of winning hidden mathematical laws that generate billions of dollars a year profit, and gambling establishments each year millions of busting hunters for good luck. Let us try to understand the device and to understand why roulette playing it impossible to have a stable income.
In probability theory, the fundamental are two concepts: the event and the probability of occurrence of the event. An event can be understood as anything. Sunny day after a series of cloudy days, the strike of workers in the factory, a chance meeting with an old friend on the street, an accident on the road, flight delay due to a technical failure of the aircraft - all events that occur with a certain probability.
Among the countless events are those that may occur at the same time (if it is acomplex event), and there are those that are mutually exclusive and at the same time never occur may not. For example, you can go outside, meet your old friend close to the factory, where the workers' strike in a warm sunny day. In this example, three events came at the same time. And events such as, for example, a sunny day and rainy day mutually exclusive and at the same time will never come. It is easy to understand that the probability of a compound event is much smaller than a single simple event, included in the complex, as for the occurrence of a complex event should coincide several factors.
Consider another classic example - dice. On a playing dice six faces, each of which dots are applied to the figure (1 to 6). Loss of one of the numbers by throwing dice is an event. At the same time in a single roll may fall only one number. Thus, variants of the events at throwing dice with 6, and all of them are mutually exclusive.
It is clear that when throwing dice, we always fall any number. That is, the probability of any number can be safely taken as a unit or 100%. What is the probability of a single number, such as 1 or 5? Are the probabilities of these? We will try to solve this.
In probability theory is the concept of the probability distribution. It is a function of the probability of occurrence of the event. We will not go into details, but let's say only that the loss of numbers on the game-cube has a uniform probability distribution, ie, the probability of different numbers of the same. This is because the dice has a regular shape and uniform density. As the numbers on the dice are 6, the probability of each number separately is 100/6 = 16.6666 ...%.
The next important stage in the development of probability theory - the theory of large numbers. In our example with a dice its meaning lies in the fact that if we throw our dice so many times, that every single number will occur in proportion to the probability of their events. And since all six numbers the probability of loss are the same, each number will drop the same number of times. And the more time to throw the dice, the smaller the error of this statement. Error approaches zero when the number of shots approaching infinity. Thus, if we throw the dice 1 000 000 times, each number will drop about 166 667 times with a certain error.
What if the probability distribution of the uneven? Suppose we have covered lead one of the faces of a die, thus changing its distribution density.The probability of loss of 1 became equal to 50%, and the probability of the remaining 5 numbers remained the same at 12.5%. Now, if we throw the dice for 1 000 000 times, the number 1 will drop about 500 000 times, and the rest of about 125 000 times each.
Let's go back to the roulette. On the field of 37 cells: numbers from 1 to 36 and one zero (0). The probability distribution of loss of numbers in roulette and dice like a uniform. Hence, the probability of each individual number on the roulette table, and the same is equal to 1/37. Casino winnings paid in the case of guessing (loss) of a single number equal to 1:36. It turns out that we have delivered on every ruble with probability 1/37 we will get 36 rubles. According to the law of large numbers, if we play the roulette X times, each time putting the ruble on one number, our gain is:
All of you have correctly understood - the minus sign in the resulting formula just means your loss and win the casino. It does not matter what number you put. Continuing on the same or on different all the time - the formula remains the same. Again, the larger X, the smaller the error in the formula. When a small value X error can be large, so if you come to the casino, made a few bets, won, they went away and never came back - the casino you suffered losses. But, once winning, few can stop - roulette game becomes a lifestyle. Hoping to win people back again, he begins to play consistently and often. The number of games played, the error is reduced formula in the end man loses. Even if a person specifically taken after a big win at the casino will never come back, anyway, there will be others, new hunters for good luck and gambling business will thrive.
It should make one note. According to the formula, it turns out that having played thousands of games on the ruble, the player loses only 1/37 part, that is, about 27 rubles. At this rate you can stay afloat for a long time enjoying the game. In fact, few people playing roulette on the ruble, a person destroys his own excitement.Making risky high stakes one comes to the fact that its capital is not enough to win.This is what leads to the ruin - the lack of funds for further game (roleplaying). If all players were billionaires, they could play a long losing only 1/37 part of their bets.
1/37 - it is about 2.73%. This is precisely the advantage of the casino over the player. In the American version of roulette (unlike Europe) on the two zero (0 and 00). In such a roulette casino advantage over the player 2/38 - about 5.26%, which further tightens the rules of the game.
Of course, in roulette, you can bet not only on a single number, but also at the same time for 2, 4, or directly on a range of numbers. But at such rates and in proportion to the reduced payout, ie the formula is not changed. The casino always wins, and the expected profit can be calculated mathematically. In European roulette is 2.73% of the total bets of all the players in the American roulette is 5.26%. For other games also have their own formula for calculating probabilities, and thus the expected profits of the gambling house. The real casino profit differs from that expected due to the fact that people just do not have best winning back - they lose everything.
That's why the casino can not have a stable income. With Forex same things completely differently. We also have events (increase or decrease in exchange rates relative to each other) and the probability of their occurrence. But the uneven distribution of these probabilities - a clear mathematical formula can not withdraw. Moreover, the predicted probability, and if appropriate use forecasting tools (analysis), such as technical analysis and fundamental analysis, the Forex can be a stable income.
Why do seemingly chaotic behavior of exchange rates to forecast, we discuss in detail in the following sections of the site. Now, just say that the movement of exchange rates create the people themselves (brokers, dealers, the Internet traders). If most of them are buying currency (a bullish sentiment prevails), its rate increases. If most of them are selling (bearish sentiment prevails), its rate falls. If you can just define the mood of the market and stand on the side of the majority, you will receive a stable income. Since most Forex traders to determine market sentiment using similar analysis tools, all you need to do - is to repeat the majority, do everything.
It is necessary to make one important reservation. Most Forex in this formulation is not determined by the number of traders and the volume of transactions made by them. Major transactions in the foreign exchange market consists only experienced traders - dealers of big investment companies, investment funds and banks. This is - people with special education, years of experience, great knowledge. To successfully trade forex you need to copy the model of behavior of people in the foreign exchange market, and this is impossible without the proper training.
So before you get started on Forek with, you need to properly explore the market, as well as the tools that are used to predict the behavior of its professionals. This is - the only way to success!
So as you can see, working at Forex is a game of roulette little in common. Continue to study the material site, and you learn a lot, and thus over time will receive a steady income in Forex. The value of this income will depend solely on you. Your success is only in your hands!
The game of roulette is as old as the world. It can be called one of the great inventions of mankind. The roulette and the rules of the game it is very simple. But behind the apparent simplicity of winning hidden mathematical laws that generate billions of dollars a year profit, and gambling establishments each year millions of busting hunters for good luck. Let us try to understand the device and to understand why roulette playing it impossible to have a stable income.
In probability theory, the fundamental are two concepts: the event and the probability of occurrence of the event. An event can be understood as anything. Sunny day after a series of cloudy days, the strike of workers in the factory, a chance meeting with an old friend on the street, an accident on the road, flight delay due to a technical failure of the aircraft - all events that occur with a certain probability.
Among the countless events are those that may occur at the same time (if it is acomplex event), and there are those that are mutually exclusive and at the same time never occur may not. For example, you can go outside, meet your old friend close to the factory, where the workers' strike in a warm sunny day. In this example, three events came at the same time. And events such as, for example, a sunny day and rainy day mutually exclusive and at the same time will never come. It is easy to understand that the probability of a compound event is much smaller than a single simple event, included in the complex, as for the occurrence of a complex event should coincide several factors.
Consider another classic example - dice. On a playing dice six faces, each of which dots are applied to the figure (1 to 6). Loss of one of the numbers by throwing dice is an event. At the same time in a single roll may fall only one number. Thus, variants of the events at throwing dice with 6, and all of them are mutually exclusive.
It is clear that when throwing dice, we always fall any number. That is, the probability of any number can be safely taken as a unit or 100%. What is the probability of a single number, such as 1 or 5? Are the probabilities of these? We will try to solve this.
In probability theory is the concept of the probability distribution. It is a function of the probability of occurrence of the event. We will not go into details, but let's say only that the loss of numbers on the game-cube has a uniform probability distribution, ie, the probability of different numbers of the same. This is because the dice has a regular shape and uniform density. As the numbers on the dice are 6, the probability of each number separately is 100/6 = 16.6666 ...%.
The next important stage in the development of probability theory - the theory of large numbers. In our example with a dice its meaning lies in the fact that if we throw our dice so many times, that every single number will occur in proportion to the probability of their events. And since all six numbers the probability of loss are the same, each number will drop the same number of times. And the more time to throw the dice, the smaller the error of this statement. Error approaches zero when the number of shots approaching infinity. Thus, if we throw the dice 1 000 000 times, each number will drop about 166 667 times with a certain error.
What if the probability distribution of the uneven? Suppose we have covered lead one of the faces of a die, thus changing its distribution density.The probability of loss of 1 became equal to 50%, and the probability of the remaining 5 numbers remained the same at 12.5%. Now, if we throw the dice for 1 000 000 times, the number 1 will drop about 500 000 times, and the rest of about 125 000 times each.
Let's go back to the roulette. On the field of 37 cells: numbers from 1 to 36 and one zero (0). The probability distribution of loss of numbers in roulette and dice like a uniform. Hence, the probability of each individual number on the roulette table, and the same is equal to 1/37. Casino winnings paid in the case of guessing (loss) of a single number equal to 1:36. It turns out that we have delivered on every ruble with probability 1/37 we will get 36 rubles. According to the law of large numbers, if we play the roulette X times, each time putting the ruble on one number, our gain is:
36/37 * X - X =
X * (36/37 - 1) =
-1/37 * X
All of you have correctly understood - the minus sign in the resulting formula just means your loss and win the casino. It does not matter what number you put. Continuing on the same or on different all the time - the formula remains the same. Again, the larger X, the smaller the error in the formula. When a small value X error can be large, so if you come to the casino, made a few bets, won, they went away and never came back - the casino you suffered losses. But, once winning, few can stop - roulette game becomes a lifestyle. Hoping to win people back again, he begins to play consistently and often. The number of games played, the error is reduced formula in the end man loses. Even if a person specifically taken after a big win at the casino will never come back, anyway, there will be others, new hunters for good luck and gambling business will thrive.
It should make one note. According to the formula, it turns out that having played thousands of games on the ruble, the player loses only 1/37 part, that is, about 27 rubles. At this rate you can stay afloat for a long time enjoying the game. In fact, few people playing roulette on the ruble, a person destroys his own excitement.Making risky high stakes one comes to the fact that its capital is not enough to win.This is what leads to the ruin - the lack of funds for further game (roleplaying). If all players were billionaires, they could play a long losing only 1/37 part of their bets.
1/37 - it is about 2.73%. This is precisely the advantage of the casino over the player. In the American version of roulette (unlike Europe) on the two zero (0 and 00). In such a roulette casino advantage over the player 2/38 - about 5.26%, which further tightens the rules of the game.
Of course, in roulette, you can bet not only on a single number, but also at the same time for 2, 4, or directly on a range of numbers. But at such rates and in proportion to the reduced payout, ie the formula is not changed. The casino always wins, and the expected profit can be calculated mathematically. In European roulette is 2.73% of the total bets of all the players in the American roulette is 5.26%. For other games also have their own formula for calculating probabilities, and thus the expected profits of the gambling house. The real casino profit differs from that expected due to the fact that people just do not have best winning back - they lose everything.
That's why the casino can not have a stable income. With Forex same things completely differently. We also have events (increase or decrease in exchange rates relative to each other) and the probability of their occurrence. But the uneven distribution of these probabilities - a clear mathematical formula can not withdraw. Moreover, the predicted probability, and if appropriate use forecasting tools (analysis), such as technical analysis and fundamental analysis, the Forex can be a stable income.
Why do seemingly chaotic behavior of exchange rates to forecast, we discuss in detail in the following sections of the site. Now, just say that the movement of exchange rates create the people themselves (brokers, dealers, the Internet traders). If most of them are buying currency (a bullish sentiment prevails), its rate increases. If most of them are selling (bearish sentiment prevails), its rate falls. If you can just define the mood of the market and stand on the side of the majority, you will receive a stable income. Since most Forex traders to determine market sentiment using similar analysis tools, all you need to do - is to repeat the majority, do everything.
It is necessary to make one important reservation. Most Forex in this formulation is not determined by the number of traders and the volume of transactions made by them. Major transactions in the foreign exchange market consists only experienced traders - dealers of big investment companies, investment funds and banks. This is - people with special education, years of experience, great knowledge. To successfully trade forex you need to copy the model of behavior of people in the foreign exchange market, and this is impossible without the proper training.
So before you get started on Forek with, you need to properly explore the market, as well as the tools that are used to predict the behavior of its professionals. This is - the only way to success!
So as you can see, working at Forex is a game of roulette little in common. Continue to study the material site, and you learn a lot, and thus over time will receive a steady income in Forex. The value of this income will depend solely on you. Your success is only in your hands!
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