Lefora Free Forum
94 views

The law of averages ...?

Page 1
posts 1–4 of 4
regular - member
123 posts

So I've got this bot that long term runs at a fairly low ROT, let's say 3% and has a fair degree of volatility... it's been running for over a year.
Then one week it hits a 'lucky streak' and returns 20% ROT ... it's seen winning steaks before but nothing as big as this.
This is good news indeed, but in the back of my mind I can't help thinking it's an opportunity too. Surely, since the expected ROT is only 3% there a good chance that in the short/medium term future an inevitable losing streak/correction is 'due'. Previous peaks in the pnl have indeed been followed by troughs.

Ought I lower the stakes for a while and up them again later??

Clearly not, but it is tempting!

novice - member
34 posts

Unless you can accurately predict when the trough is coming it's just a case of accepting the 3% long term I guess. If your bot has a fair degree of volatility you're just as likely to miss out on a peak by lowering stakes.

Probably best to look at the dat and see if there's a pattern emerging within the peaks

regular - member
74 posts

Unless your winnings were so huge as to directly affect future markets (e.g. by scaring off other punters) the fact that your bot has had a lucky streak doesn't make it any more likely to have an unlucky streak.  To quote from Wikipedia:

The gambler's fallacy, also known as the Monte Carlo fallacy or the fallacy of the maturity of chances, is the false belief that if deviations from expected behaviour are observed in repeated independent trials of some random process then these deviations are likely to be evened out by opposite deviations in the future. For example, if a fair coin is tossed repeatedly and tails comes up a larger number of times than is expected, a gambler may incorrectly believe that this means that heads is more likely in future tosses.[1] Such an event is often referred to as being "due".

So just enjoy your extra winnings I'd say.

regular - member
134 posts

I find that any bot that is capable of good winning streaks is usually capable of much better losing streaks ;)

Page 1
posts 1–4 of 4

This Topic Is Locked To Guest Posts

It's been a while since this topic was active, if you'd like to get it going again, please post as a registered member

join now