Bringing Down the House Starting in the late 1970s, teams of blackjack players recruited from MIT began descending the Eastern Seaboard to the Mid-Atlantic casinos of Atlantic City to test a fundamental statistical principle... conditional probability. By keeping a running mental count of the number of high-value to low-value cards in a blackjack shoe relative to the size of the remaining cards in the shoe, teams could deploy dynamic betting strategies to try to take advantage of the changing probabilities of successful outcomes in the game... It worked. For the next twenty years, hundreds of Massachusetts numberphiles took on the world's casinos armed with this Bayesian principle raking in millions of dollars. Conditional Probability in Finance Conditional probability is defined as 'the likelihood of an event or outcome occurring, based on the occurrence of a previous event or outcome' and it's the cornerstone of financial data modeling. Trading algorithms call indicat...