# Coin Tossing - Risk & Money Management



## RichKid (5 July 2005)

Came across this article on the oft talked about coin flipping scenario in SFO (Stocks Futures & Options) Magazine (www.sfomag.com). A free subscription online so you can join if you like- I saw the hardcopy at a newsagency and thought it was worth a read. The May issue is on Trend following. I often come across the coin tossing example in money managment books and articles so thought I'd extract this article for discussion if anyone is interested. Fascinating stuff which I have found very useful in terms of understanding (or trying to understand) money and risk management.

I'm interested in discussing this if anyone wants to do it in a practical manner which allows us to better manage our trading. Tech and Wayne etc have mentioned some aspects of this before. Terms like 'maximum consecutive winners' will come to mind for systems traders. We will probably touch on statistics too if this discussion really gets going, found a lot of statistics used in some options books I've been trying to understand as well so it's always relevant.



> *Is the Trend Really Your Friend? A Professional Trader Flips a Coin 10,000 Times to Find Out*
> By David Silverman   SFO Mag- May, Vol 4 No 5
> 
> What can coin flipping tell us about basic chart patterns that traders believe are their friend?
> ...


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