This is a question for those good at Math and probability. It has to do with probability distribution and probability mass function. Now, let's say we have two trading systems; System1 and System2. Each places trades for 5 days and these are the end of day profit results: System1: 1: +210 2: +90 3: +20 4: +70 5: -340 Total System1 = +50 Average daily = +10 System2: 1: +20 2: -10 3: +15 4: -5 5: +30 Total System2 = +50 Average daily = +10 -------------------------------- On the face of it, both systems are equally profitable. However, the price distribution on system1 is much wider than system2, indicating there was an element of luck involved. This means that the true profitability (predicted forward) of system1 should be lower than system2, if we were to adjust according to the risk and unreliability of the results. I am using only 5 days for the sake of simplicity, but sample size will be a constraint in real testing also. Question: What is the probability that the next (6th) day will be +10 (average daily) for system1 and system2? I expect that it will be higher for system2 and lower for system1. How would I calculate exactly by how much? I tried using the probability distribution formulas but i haven't had any luck. I'm overworked and underslept for the last few days and this just isn't getting through to my brain. I normally solve these things myself but for whatever reason my brain is just stuck on a seemingly simple problem. Embarrassing. Any clues will be appreciated. PS I'm not even sure i'm approaching this problem correctly, or that it has so much to do with probability. Maybe i'm just using the wrong formulas. Thanks.