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RE: Determining how much to Stake in Trading

in #cryptocurrency7 years ago (edited)

Good article, I've used the Kelly formula in the past but abandoned it because my systems fell outside the criteria of my maximum risk amount a lot of the time.

Example, a system is 40% winners with a 5:1 reward, Kelly suggests using 28% capital risk on each trade... a little too scary lol.

One day I'll get round to plotting it, but there seems to be a narrow range of win probability and risk reward ratios that end with realistic risk levels for trading, like 1 or 2%.

I think the Kelly system is optimised for probability of 50:50 like a coin toss, when you start changing the R:R it wildy skews the values.

Resteeming, because I love all things probability !