- #1
RomRom
- 1
- 0
Dear Community,
I am faced with a challenge. I can't quite grasp the implications of this.
I schould've listened better in statistics lectures!![Blushing :blushing: :blushing:](https://www.physicsforums.com/styles/physicsforums/xenforo/smilies/oldschool/blushing.gif)
I would really appreciate your help. :)
I have a not normal stochastic process P on which I can bet.
Obviously, I don't know the distribution of P. It is somehow what I want to find in order to profit from the betting strategy.
I can either bet on the fact that P will increase in the future or that P will fall. (It works a bit like the stock-market, I like the analogy. I.e. I can either buy P or sell P. The value of P fluctuates over time).
What I did is take P through a "step function", so that I can map P to a random walk.
At each step, P can either go up or by the step size or go down by the step size. The step size is a fixed percentage of P's current value.
In other words, I had P represented in the value/time plane and I now have it in the value/step plane.
Now it turns out that P is gaussian in the value/step plane!
At every step, the probability of P going up/down is 0.5.
I think I can't fully grasp the implications of this.
Has anyone any idea how it can help betting on P?
What would be a positive expectancy betting strategy?
Thanks,
Julia
I am faced with a challenge. I can't quite grasp the implications of this.
I schould've listened better in statistics lectures!
![Blushing :blushing: :blushing:](https://www.physicsforums.com/styles/physicsforums/xenforo/smilies/oldschool/blushing.gif)
I would really appreciate your help. :)
I have a not normal stochastic process P on which I can bet.
Obviously, I don't know the distribution of P. It is somehow what I want to find in order to profit from the betting strategy.
I can either bet on the fact that P will increase in the future or that P will fall. (It works a bit like the stock-market, I like the analogy. I.e. I can either buy P or sell P. The value of P fluctuates over time).
What I did is take P through a "step function", so that I can map P to a random walk.
At each step, P can either go up or by the step size or go down by the step size. The step size is a fixed percentage of P's current value.
In other words, I had P represented in the value/time plane and I now have it in the value/step plane.
Now it turns out that P is gaussian in the value/step plane!
At every step, the probability of P going up/down is 0.5.
I think I can't fully grasp the implications of this.
Has anyone any idea how it can help betting on P?
What would be a positive expectancy betting strategy?
Thanks,
Julia