advanced-algorithmic-trading

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P (θ|α, β) = θ α−1 (1 − θ) β−1 /B(α, β) (3.10)
Where the term in the denominator, B(α, β) is present to act as a normalising constant so
that the area under the PDF actually sums to 1.
I’ve plotted a few separate realisations of the beta distribution for various parameters α and
β in Figure 3.1.
Figure 3.1: Different realisations of the beta distribution for various parameters α and β.
To plot the image yourself, you will need to install seaborn:
pip install seaborn
The Python code to produce the plot is given below:
# beta_plot.py
import numpy as np
from scipy.stats import beta
import matplotlib.pyplot as plt
import seaborn as sns
if __name__ == "__main__":
sns.set_palette("deep", desat=.6)
sns.set_context(rc={"figure.figsize": (8, 4)})