How to Play Pure Alpha or Devils – Analysis and Predictions – February 2, 2024

Enjoy this book while drinking coffee or tea ☺️. If you like trading and thinking about games and strategies, you’ll love this app!

A few weeks ago I came across an interesting game idea that was somewhat related to general trading and risk management.

Imagine you have 11 cards. You mix them up and choose one from the steak. If you get yellow, your balance will be doubled. If you get the Blue Devil Card, your balance will be multiplied by 1/2048. So it’s basically a margin call. 🔥 Start with $1 million in capital.

The only thing we can control in Devil’s Card Game is when we leave.

Our hope is to double our $1 million a few times and get away safely before the “devil” shows up.

Initially, there are 11 cards in the deck: 10 “double” cards and 1 “demonic” card.

So the probability of drawing a “double” is 10/11 = ~90.9%. Those are pretty good odds.

However, the more double cards we draw, the less likely it is that the next card will be a double.

For example, let’s say you drew 6 doubles.

There are now 5 cards left in the deck: 4 “Double” cards and 1 “Devil” card.

Now the probability of drawing a “double” is only 4/5 = 80%.

Still pretty good odds, but not as high as they were when I started playing.

If we draw a “devil”, we see that everything left The cards in the deck are doubles. Because there is only one “devil”.

so, ~ after Painting “the devil” should not leave us alone. We need to maintain all 11 draws, which leaves us with $500,000.

So that’s the worst case. We walk away with $500,000.

What is the best case? This is a case of drawing 10 doubles in a row. That would take you $1M * (2^10) = $1.024 billion.

(After 10 doubles in a row, you’ll know for sure that the last remaining card is “Devil”, so I won’t draw it.)

Before the ‘Devil’ card appears, let’s take a look at the results depending on how many good cards you received.

Now let’s get one step closer to the real deal. Let’s change the rules. Now we can determine the size of the bet for each card draw.

Then there is an optimization trick called “reverse induction“. Cool stuff for nerds. Here’s a quick summary:

Let’s use this logic to make money with Forex. To get closer to the “devil’s game” I choose a strategy with a high win rate and somewhat larger losses (SL is much larger than TP).

Using a constant lot size:

The chart above shows the optimized strategy (Read about safe optimization) The odds of winning are high. So there are many wins, but sometimes there are even bigger losses. I think you’ve probably seen quite a few of these types around you. We can also see that there are times when several demons (losses) exist very close to each other. This is the moment when people apply the martingale strategy and their accounts are terminated.

Let’s see how you can make good profits with this strategy.

Similar to the Devils Game solution, define the following settings:

• The maximum position size is 11×0.01=.0.11 lots – I think that’s pretty fair for a $1000 account.

• We reduce your ranking by 10% for each win. It means first. 0.11The second is 0.11*0.9=0.10etc.

Backward induction for risk management is a part that is not yet released. 9000 BFGs. I can’t tell you how excited I am to hear about its release! 🚀

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