I'm a bit confused about this. I didn't know what this means and had to look it up.
Is '0.26 (99.98%)' as it's supposed to be? The percents seem to indicate that the 0.26 should actually be calculated as 1/n = 3.85? Or have I misunderstood this completely? Has this been 'turned around' so that the smaller the number the better the expectancy?
The sign doesn’t make the z-score value any better or worse – what we’re looking to see is a z-score value greater than 1.96 or less than -1.96 (Equal to 95% probability or better).
While z-score tells us if the streak of losses/wins are random or not, the sign simply tells us if the dependence is positive or negative, meaning:
Z-Score negative – dependence is positive. Z-Score positive – dependence is negative.
Positive dependence – a profit will be followed by a profit and a loss by a loss. Negative dependence – a loss will be followed by a profit and a profit by a loss.
And how certain can we be that it will happen? This is the percentage that is shown to you in your system’s z-score value. So for example, if z-score = 2.17(97.0%), it means there is a 97% confidence level that a loss will be followed by a profit and a profit by a loss (negative dependence). In such case you would want to miss a trade after a profit and take a trade after a loss to maximize profits and minimize losses.
Hope that’s clear enough! We’ll add a section describing it in full, in the next several days.
Thanks for the explanation! I read the comments on your blog and the links too.
What is still confusing me is that the probability percent always seems to be 99.98%. On every system. There's a bug in the code? Or does it update at certain times only and gets calculated correctly later?
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