📊Expectancy: The Data to Transform Uncertainty in Wealth
Alpha Hedge Strategy Breakthrough - Part 4
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Expectancy: The Data to Transform Uncertainty in Wealth
Mathematical expectancy stands as a lighthouse, guiding ships safely to the shores of predictability and strategic success.
Often shrouded in the mist of mathematical complexity, this principle is indeed a cornerstone in not just financial forecasting but also in life decisions encompassing career planning and health management.
The Expectancy Ratio is a key component of our Alpha indicators, serving as a crucial element in the comprehensive framework of the Alpha Hedge Strategy.
Alpha 1 focuses on analyzing the current state of the asset.
Alpha 2 is dedicated to examining the historical performance of the market
Alpha 3: Expectancy Ratio, with this data we analyze what to expect in the future based on statistics.
The Essence of Expectancy in Charting Success
"Expect the unexpected" is not just a catchy phrase but a strategic mantra in the realm of success planning.
Expectancy is the quiet yet potent force in the alchemy of wealth building.
Here, it partners with risk management and leverage, acting as the fulcrum in the delicate balance of future value equations. It’s not just about what might happen; it’s about the implications of what might happen.
The crux of the matter is that expectancy isn't merely a concept; it's a compass for navigating the turbulent seas of future uncertainties.
Decoding the Mathematics of Expectancy
Often bypassed in fear of its perceived complexity, the formula of expectancy is the Rosetta Stone for translating uncertain futures into clear, scientific, and actionable insights.
The formula itself is a symphony of probabilities and payoffs:
Expectancy Ratio = [Probability of Win x (Avg Win/|Avg Loss|)] – (Probability of Loss)
This isn't just math; it's the language of future outcomes, blending the likelihood of events with their financial impact, thus offering a panoramic view of the terrain ahead.
Application in the Real World: More than Just Numbers
The power of expectancy transcends the confines of theoretical finance. It’s about understanding the weight of each decision, the ripple each choice sends across the pond of future possibilities.
Here, risk isn't just managed; it's strategized. Leverage isn't just used; it's mastered.
This is where the rubber meets the road, turning abstract calculations into concrete, informed, and strategic decisions.
Expectancy as a Life Strategy
Zooming out from the financial lens, expectancy emerges as a versatile tool in the toolbox of life. It’s about embracing the unpredictable, understanding the impact of low-probability, high-impact events, and making decisions that tilt the scales in your favor.
By adopting mathematical expectancy in decision-making, we're not just planning; we're architecting our future.
In essence, the journey through the maze of life's uncertainties is not just about avoiding the pitfalls but also about charting a course towards success.
Mathematical expectancy is the compass that guides us through this journey, transforming the unpredictable into the navigable and leading us towards a future where success is not just a possibility but a calculated probability.
EXAMPLE: AMD 0.00%↑ 2023/2024 CYCLE
Observe the Expectancy Ratio analysis for AMD 0.00%↑.
As seen in the Graph, AMD 0.00%↑ entered in Positive Cycle in March 2023, starting the Phase 3. Currently is in Phase 4 (Alpha 1).
The Alpha Hedge Performance (+130524.8%) overtook the Buy & Hold Performance (+26057.5%) in 51 years (Alpha 2).
The left information to identify if a position in AMD 0.00%↑ should be assembled in march is the expectancy ratio, let’s calculate with the data of the chart above.
Expectancy Ratio = [Probability of Win x (Avg Win/|Avg Loss|)] – (Probability of Loss)
Expectancy Ratio = (50% x 65.95%/17.68%) – (50%)
Expectancy Ratio = (50% x 3.73) - 50%
Expectancy Ratio = 1.865 - 50% = 1.365
Expectancy Ratio =~1.4
This way, we expect to gain 1.4 Dollars, for each Dollar risked.
This way in March/2023, AMD 0.00%↑ had all green lights (Alphas 1, 2 and 3), in 01/18/2024 It returned 104%.
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