Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Unconditional Probability

What it is:

Unconditional probability refers to the chance that a particular event will occur without regard to external circumstances.

How it works (Example):

The outcome of a single event can be affected by any number of accompanying conditions. Unconditional probability is the likelihood that an event will end with a specific result irrespective of other conditions that may be present.

Unconditional probability is calculated by dividing the instances of a definite outcome by the total number of events. For example, if a die lands on the number five 15 times out of 60 , the unconditional probability of landing on the number five is 25% (15 outcomes /60 total lots = 0.25).

Why it Matters:

Unconditional probability calculates the likelihood you'll get a particular outcome even if you can't know what specific external conditions exist. Traders use unconditional probability to gauge the eventual profitability of a security.