When creating a binomial strategy, it's important to have an outline to optimize the growth of your
Question:
When creating a binomial strategy, it's important to have an outline to optimize the growth of your investments. If we are working with independent variables that are continuous. For example, with a 35% chance of winning and 65% chance of failure, you could make 435% profit upon win and lose 100% upon loss. For the presented odds, how could you create the most optimized strategy? Create an outline for measures to take for such a strategy, for the expectation of maximizing gains. Things to consider when optimizing for maximum growth:
- Expectation, Variance, STD and the measure for how close the STD and Variance are to one another.
- Using the Perfect Balance Formula, adjusting the balance % with risk for potential success in the next trial.
- Monte Carlo Simulations for Portfolio management Use X% of balance on Strategy A and Y% of Balance on strategy B etc.
- Utilizing Binomial, Poisson and Gamma distributions.
Questions/Tasks:
1) Create an outline of what to do step by step
2) What other formulas, measurements or concepts would you add for further optimizations?
3) How would you go about comparing all the measurements for each strategy to see which one is better? Should you use a combination of strategies?
Social Statistics For A Diverse Society
ISBN: 9781483333540
7th Edition
Authors: Chava Frankfort Nachmias, Anna Leon Guerrero