I don't expect this thread to become a great discussion but i had an argument with someone about the value area and the VWAP and just would like to get some feedback from people who have some math background.

The argument was about the fact that a VWAP is just an average of volume while the Volume Value Area bands 1 standard deviation away from the VPOC was not an average.

Is it true to say the Volume Value Area Channel is somewhat a form of averaging of price around the VPOC?

trendisyourfriend 

I don't expect this thread to become a great discussion but i had an argument with someone about the value area and the VWAP and just would like to get some feedback from people who have some math background. The argument was about the fact that a VWAP is just an average of volume while the Volume Value Area bands 1 standard deviation away from the VPOC was not an average. Is it true to say the Volume Value Area Channel is somewhat a form of averaging of price around the VPOC?

TECHNICALLY you can't have a standard deviation without an average.

Volume value area is just 70% of the periods traded volume centered around the mode (greatest frequency).

Basically someone just took the concept of a std dev and applied it incorrectly. But just because it's not good math doesn't mean it doesn't work.

Another math question...

I want to know the formula to find the winning % i need to achieve on a coin flip bet to reach the break even point over the long term if the payoff is 75%, i.e., i bet $1 to win .75 cents or lose $1. It must be easy but apparantly my mind is off presently. Thanks

you need to win 57% of time to b/e:

(Win * Prob of Win) - (loss * Prob Loss) = 0

substituting, you get:

(0.75 * 0.57) - (1 * 0.43) = 0

erniebilko 

you need to win 57% of time to b/e: (Win * Prob of Win) - (loss * Prob Loss) = 0 substituting, you get: (0.75 * 0.57) - (1 * 0.43) = 0

How do you get the 0.57 number? That's what i am trying to get via a formula.

i actually did it in my head. multiplying 0.75 by 4 gives 3 so you have to win 4/7 of the time to b/e

trendisyourfriend 

I don't expect this thread to become a great discussion but i had an argument with someone about the value area and the VWAP and just would like to get some feedback from people who have some math background. The argument was about the fact that a VWAP is just an average of volume while the Volume Value Area bands 1 standard deviation away from the VPOC was not an average. Is it true to say the Volume Value Area Channel is somewhat a form of averaging of price around the VPOC?

No. First, the vpoc and vwap are not the same thing. vpoc is the mode, vwap is the mean. std dev bands are calculated around the mean. the bands themselves are not averages, they represent how closely the data elements cluster around the mean.

trendisyourfriend 

Another math question... I want to know the formula to find the winning % i need to achieve on a coin flip bet to reach the break even point over the long term if the payoff is 75%, i.e., i bet $1 to win .75 cents or lose $1. It must be easy but apparantly my mind is off presently. Thanks

I use this formula for determining the winning percentage required for an expectancy of 0 ie break even :


WP = Winning pct
AW = Average win
AL = Average loss


WP = 1 / ( ( AW/AL ) +1 ) .

So in your case it would be :

WP = 1 / (( 0.75 ) +1 ) = 0.57 ie 57 % required for break even

with .62 it's

wp = 1 / ( 0.62 +1) = 0.617 ie 61.7 %