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UNDERSTANDING THE CYCLE NUMBER SERIES – VIDEO – LONG VERSION

Updated

The Tactical Trading algorithm produces an exact solution to a two-occurrence random walk, although randomness is not a requirement for the system to be profitable. This two-occurrence random walk is illustrated for example in the game of roulette, where you can bet on black/red or odd/even. In the application of the system to the stock market, the two occurrences are when the stock moves up and when the stock moves down.

The algorithm is based on the manipulation of a numerical series; I will use a series of 1 2 3 4 in my example and we will presume we are betting on black in a roulette game, black is a win, and red is a loss.

The win amount after concluding the cycle is the sum of the series numbers. Our 1 2 3 4 series will net 10 when all numbers are crossed off.

My bet size of any chip denomination is determined by adding the two end numbers of the series together. If I win, I cross off the two end numbers, if I lose, I add the sum of the two end numbers to the end of the number series. Then I add the two end numbers together and bet again. When all the numbers have been crossed out the cycle is completed.

For example, let’s use the number series: 1 2 3 4

The sum of this series 1 + 2 + 3 + 4 = 10. This is your expected win amount for this cycle.

Bet the sum of the first and last numbers: 1 + 4 = 5

Say you lose, so you note the value of your loss (5) at the right end of the series.

The series is now 1 2 3 4 5

Bet the sum of the first and last numbers: 1 + 5 = 6

Now you win. When you win you remove the first and last numbers in the series. This 1 and 5.

The series now is: 2 3 4

Add the two end numbers together and bet again. 2 + 4 = 6

You lost again. Remember when a loss occurs you append the previous number to the series, the 6.

The series becomes 2 3 4 6

Again, add the two end numbers and bet. 2 + 6 = 8

A win! Remove the two end numbers, the 2 and the 6.

We now have the series 3 4

The series is down to two numbers, which makes them the end numbers. Our next bet is 3 + 4 = 7

Great luck, a win. When we cross out the two end numbers, the 3 and 4, all the series numbers have been crossed out and the cycle has finished.

Our bets were: 5 + 6 + 6 +8 + 7 = 32 units. Our winnings were: 12 + 16 + 14 = 42.

When subtracting the bet units from win units the result is 10, exactly as expected

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