Anatomy of Odds

I bet on market for 1-day-what is my return? Off the cuff – I can make or I can lose money on a bet.  50-50 chance my return is above or below Median Daily return. Go   deeper there is a slim chance I have a heavy gain or heavy loss.  Notice that chance of winning or losing may not be 50-50.

What happens if I bet every-day?

  • What Works for you?

I catch all the upsides and all the downsides too. My total return is now the average and no longer conditional median or tails ;  as I unconditionally bet-and-get all outcomes.

  • What is the Risk?

Betting everyday [ is] a faith – not a method. It believes average of all bets will playout acceptable if not in next 10 days, in next 10 weeks or 10 months- without any limit on capital downside or opportunity downtimes. This may not be the case. And even if it is so- the path to terminal value may have unbearable downside leaving you a casualty along the way; not live again to average out.

How do I improve my Chances?

Make discrete bets to be conditionally risk- on and risk off markets. How? Say by using a rule. Example IFF Today’s close is > 10 day average Close then I am long else I am square. A Strategy process calculates Risk Reward performance metrics of a-strategy; and millions of competing strategies in your strategy universe.

What is achieved?

Rule based net returns are Higher and Risks are lower – relative to underlying market typically.

Caveat of any Winning rule?

No rule wins forever over in any market. Every winning rule goes through cycles of good & bad performance; and often-times hit a downturn not to return in your trading lifetime. Betting (rule based or otherwise) only when outcomes are acceptable and staying out otherwise is called Money Management.

A rule is only an ACTOR. It has NO intelligence. You need other tools to intelligently use a rule. CRITIC – does this task. USE your rules conditionally only when outcomes are acceptable and not otherwise. Our proprietary invention of a heuristic learning engine does the critic tasks for money management ( Alpha Generators) as well as capital allocation and selection decisions (Learning Engines)  in risk taking. Actor-Critic engines together whip up risk-reward beyond human hand eye mind co-ordination.

Click here to Read More…

I Am
My Game
My Markets