1 out of 1 members found this post helpful.
Did you find this post helpful?
Yes |
No
Originally Posted by
dalmatian
Is floored the right term here though? I thought floored means you go down when it is a decimal (less positive or more negative)....
The point is that indices are determined over an entire interval, or bucket, and not just a single point. If, for example, you insure at +2 in DD, you are insuring all counts from +2 to just below +3. So, if the "precise" index is, say, +2.4, you are making a mistake over the interval +2 to +2.4. And that is more costly than being right from +2.5 to +3. So, taken as an entire interval, you have to wait until floored +3 (+3 to just below +4) to be positive EV. You might think that there is more frequency to the bucket from +2.4 to +3 than from +2 to +2.4, so you'd be right more than wrong, but that isn't true, because there is more frequency to the first interval, as the frequency decreases as the TC increases. I know it sounds complicated, but you have to trust the math.
The same analogy applies to SD.
Don
Bookmarks