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Trading Probabilities Using Bayesian Theorem
Hi all,
I've done some research about probabilities and came up with this very interesting concept, finding historical/prior outcomes/knowledge and use it to evaluate the current market action to take the appropriate move, long, short, or flat, be it an entry/exit type for a particular market condition.
Does anyone have experience in this area and be willing to share as I'm interested in develop this idea further to enhance my systems. Thanks.
I did try to understand a book I had on Bayesian Analysis of Time Series Data but it only worked for the first 20 pages before it went a little above my head with the Maths ( I have a degree in Maths & Physics so it isn't like I cannot understand basic stuff). Certainly sounds interesting. I have found a lot of interesting statistical ideas however and unfortunately been unable to implement them in my trading models due to my mathematical limitations. I think this is where funds like Medallion score because they only employ Maths and Science Phd's who have a relevant thesis...It has to work because these guys crank out
If these guys are able to do this, it presents a dilemma, being to disseminate or not to disseminate, to openly discuss or not to discuss it at all.
Excellent mathematical analysis is surely a good thing when it comes to trading. The results of the Baysiens Theories are evidently most encouraging. Thank you for sharing.
