A Review of Bayesian Probability by Michael Lewis

I am well aware that certain technical analysts and authors have assigned “probability-of-success” data to various chart patterns. In fact, there was an entire book dedicated to this idea. I am NOT a believer in assigning a fixed probability to any chart pattern. In the past I have discussed my perception that the vast majority of highly successful traders practice a form of Bayesian Probability – whether or not they are even familiar with the concept or name. I consider myself to be a Bayesian of the subjective school (in contract to the objective school). The Bayesian theorem assigns a probability to an event — but the probability changes as events unfold. Bayesian probability theory involves a number of extremely complex mathematical formulas. In his recent book, “The Undoing Project,” Michael Lewis provides a very brief summary of Bayesian probability.

[dg ids=”13020″]