Trading Lessons/Insights From Coin Flipping

I'm on for it ... where do we start?

 

Mind explaining why my analysis was right or wrong?

 

Interesting view. The world "is" has been banned from empirical accounts.

There is no way to construct a balanced coin to more than a certain accuracy allowed by machines so a bias is inevitable.

Thus, the tossing of a fair coin is just a thought experiement to facilitate development of a theory.

This problem was known in the casino business long time ago and even after significant improvements there is still detectable bias in roulettes that some are able to estimate even in real-time.

I suggest some reading of the facts

"In the early 1990s, Gonzalo Garcia-Pelayo believed that casino roulette wheels were not perfectly random, and that by recording the results and analysing them with a computer, he could gain an edge on the house by predicting that certain numbers were more likely to occur next than the 1-in-36 odds offered by the house suggested. This he did at the Casino de Madrid in Madrid, Spain, winning 600,000 euros in a single day, and one million euros in total. Legal action against him by the casino was unsuccessful, it being ruled that the casino should fix its wheel."

http://en.wikipedia.org/wiki/Roulette#Biased_wheels

Thought experiments are only that. The real world is biased, we all know that.

 

I think time of day has potential.

Statistically, volatility can be profitable on it own. If one had to flip a coin, what time of day would be the best time to do it?

 

Your assumption is wrong.
The strategy you describe is not good (from my point of view) as it would give you a 100% win probability.

Ninna

 

Well not a 100% of the time, just positive expectation, given a random game, it is completely within the realm of possibility that my described approach would lose. But regardless, what strategy would you use to make it profitable for you?

 

Certainly, That is correct!

 

Here's how you get 100%:

You either choose two numbers greater than 50 or two numbers less than 50. And you give me the one closer to 50.

With the strategy you described I would loose everytime.


There is indeed a strategy with positive expectancy for me.
Here's a hint: the strategy's win probability has something to do with 1/e.

Ninna

 

Not in a grammatical sense...

 

My mistake. I didn't see that I "choose" two numbers. I assumed I randomly generated two numbers between 1-100 and choose a single one to show.