"The Monty Hall Problem" is a probability puzzle.

Named after the original host of the American TV show "Lets make a deal"

Here's the the setup 👇🏽

You're on a game show with 3 doors:

One hides a car, the others have goats.

You pick Door 1.

The host, knowing what's behind each, opens Door 3 to reveal a goat.

He asks if you want to switch to Door2.

🔹 Probabilities

There’s a 1/3 chance your first choice is correct and a 2/3 chance the car is behind one of the other doors.

When Monty opens a goat door, switching gives you the 2/3 chance of winning, while sticking only gives a 1/3 chance.

How is this related to trading?

Should you switch?

Is it to your advantage?

🔹 Trading & Probabilities

As a trader you always choose the setup with the highest probable outcome.

It's the only way of being profitable.

But how do you define those probabilities?

They're based on the:

DATA GIVEN BEFORE ENTERING THE TRADE

🔹 New Information

In the Monty Hall Puzzle we are receiving NEW DATA AFTER choosing a door.

Without that information our probabilities of winning stay the same.

This highlights the importance of flexibility when it comes to trading.

Now, should you switch your bias?

🔹 Flexibility

Most traders get rekt because they ignore the flow of information.

Especially if they're new and their risk management is subpar.

Sticking to a bias with conviction is a necessity, just as much as being open to a change of directions.

Be water my fren!