So are you saying.
If I have a 0.5 chance winning and hence 05. losing, and each win or loss is +10% or -10% respectively. I would write it as...
P(X = 1.1) = 0.5
P(X = 0.9) = 0.5
and that after 5 trades I would have ((1.1)(0.5) + (0.9)(0.5))^5=1
Does this mean on average after 5 trades with...
Yes its from a trading account, so if I start with $5000 and I have a win and earn 5% then I end up with $5250, then If I win again I win 5% of the $5250 ($5512.5) and so on...
I'm confused with the formula because let's say I start with 1000. and my probability of winning or losing is 50/50...
I'm stuck on what I'm sure is a very simple problem.
I'm trying to calculate predicted output for my share trading model.
For example, for a strategy the probability of it winning on each trade may be 0.4 and hence a loss is 0.6.
But for each trade it wins, my account balance is...