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## 3. How Prices Move (I)

In this chapter we will need to understand the concept of probability at a very simple level. This simple introduction will be very helpful in understanding the issues in Chapter 4.

Probability can be expressed either as a percentage or as a fraction. The difference is simply that a fractional probability is multiplied by 100 in order to arrive at the equivalent percentage probability.

In mathematics, a probability of an event X is represented by a number in the range from 0 to 1 and written as p(X). A probability of 0 means that the event is impossible, while a probability of 1 means that the event is certain. Thus if X is the event where a zero is thrown on a dice, then p(X) = 0; the event is impossible because there ...

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