Математический Форум Про Форекс

математический форум про форекс

The Mathematics of Forex

MillenialPipster:

It would seem to me that being able to calculate risk, understand probability, and calculate pip value and translate that back into your account currency, all take an exceptional grasp of mathematics.

I think it only [U]seems[/U] like it would have to be “exceptional” to people who just aren’t familiar with it. Familiarity brings confidence, though it’s doubtless also true that [I]some[/I] initial understanding is necessary, in order to get as far as “familiarity”. I’d say that those things require only a “[I]competent[/I] grasp” of the relevant parts of mathematics.

MillenialPipster:

Is being a math wizard necessary for good trading

I don’t think so. I think only competence is needed, rather than wizardry.

The rest comes with practice.

These terms are all a little subjective, and relative, I suppose. I see that some people have a [B]real[/B] blind spot with anything numerical, and I think it’s probably true that trading just isn’t, ultimately, going to suit them … but I think that such people are probably few and far between.

MillenialPipster:

what are some tools someone can use to develop their understanding of the principles needed

This book may help you greatly: [I]The Mathematics of Money Management: Risk Analysis Techniques for Traders[/I] (Ralph Vince).

And on a simpler level, regarding working out things like position-sizing and so on, the books [I]Profitability & Systematic Trading[/I] by Michael Harris and [I]Trade Your Way to Financial Freedom[/I] (especially the second half of the book) by Van K. Tharp can also help.

How to Resolve Forex Expectation Paradox

Metronome said:
Thinking about this problem is leaving me more convinced of it being equivalent to a necktie paradox or two envelope paradox, of which I know some solutions but struggle to find them satisfying
Click to expand

It seems to me that you're deliberately attempting to construct a paradox rather than trying to understand how forex actually works. Is this correct? (This might be an interesting challenge)

Let me repeat the scenario in your post, as I understand it, in steps

1. Initially:- Bob starts with $2 and Dave starts with £2
2. Now Bob and Dave have the opportunity to swap their dollars and pounds between each other at the exchange rate of £1 for $1
3. They both write down the currency that they hold just before the coin flip
4. There's a coin flip
- heads implies $1 is henceforth exchanged for £
- tails implies £1 is henceforth exchanged for $
5. Now Bob and Dave still have EXACTLY the same currency that they had in step 3
6. Bob wants $ since he's American. He uses the new exchange rate to convert any £ that he is holding into $
7. Dave wants £ since he's English. He uses the new exchange rate to convert any $ that he is holding into £
8. They both write down the currency that they hold

Steps 6 & 7 weren't very clear in your post, but I think that they are necessary for the whole scenario to make sense.

Here are the only possible outcomes

Code:

Bob and Dave both have maximum expected value when they exchange alltheir starting currency at step 2. But after they do this, you can clearly see that there's no incentive for them to swap anything back to their original currencies (at step 2) since this would reduce their expected amounts.

Discussion of article "Basic math behind Forex trading"

The article aims to describe the main features of Forex trading as simply and quickly as possible, as well as share some basic ideas with beginners. It also attempts to answer the most tantalizing questions in the trading community along with showcasing the development of a simple indicator.

If you know where to enter and exit the market, you probably don't need to know anything else. Unfortunately, the issue of entry/exit points is an elusive one. At first glance, you can always identify a pattern and follow it for a while. But how to detect it without sophisticated tools and indicators? The simplest and always recurring patterns are TREND and FLAT. Trend is a long-term movement in one direction, while Flat implies more frequent reversals.

These patterns can be easily detected since a human eye can find them without any indicators. The main issue here is that we can see a pattern only after it has been triggered. Moreover, no one can guarantee there has been any pattern at all. No pattern can save your deposit from destruction regardless of a strategy. I will try to provide possible reasons for this using the language of math.

Author: Evgeniy Ilin

nest...

6119 6120 6121 6122 6123