The Monty Hall problem, do you switch or not switch? You pick one of 3 doors. One has a prize, the other has goats. They show you one of the 2 doors that has a goat, but it cannot be the one that you selected. So do you switch to the other or keep your original choice? Easy answer, but many people are clueless about the right answer. You always switch because you increase your odds from 1/3 to 1/2. It reminds me about stock market daily patterns. Do they switch or not switch? They switch more often than not. From my experience, the current day has a negative correlation with the previous day. Not only in price change, but in the daily path of price change. Down early and up late, usually leads to a higher probability of the next day being up early down late. See Thursday intraday and Friday intraday as prime examples. Look at Friday's overnight action and Monday's overnight action. Mirror images. Almost perfectly opposite daily paths.
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3 comments:
Interesting. Market doing the opposite of previous day. So tomrrow should be smoked.
Actually if you switch you increase your odds from 1/3 to 2/3. There are 3 possible scenarios: Suppose prize is behind door 1. If you pick door 1 and you switch that is the only time you lose. If you pick door 2 or 3 you win because they will always open the door in which the prize is not behind. So when you switch you win. So your odds are 2/3 if you switch.
Right, its 2/3. Switching gives you double the odds to win than not switching.
As for tomorrow: the market switches up daily patterns but also weekly patterns. The past 2 weeks has been flat, so in all likelihood, we won't be the next 2 weeks.
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