Video Two - Law of Large Numbers (LLN)

The Law of Large Numbers states that as the number of trials increase the more likely we can expect to be at a true expectation for what we are observing. In trading terms, the more trades (trials) we have the more likely we can believe the statistics we are witnessing.

In other words, we need to survive and find systems that trade enough so that we can experience the statistics we would expect from our research and testing.

A chart pattern may take MONTHS to build for just ONE trade. These types of patterns are very infrequent and do not take advantage of the Law of Large Numbers.

I have found it much more prudent to find more frequent signals that tend to be much more reliable and consistent!