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Chichungchoi:
The formulation I gave is to determine the "bet size". In other words, a
coefficient has to be established so one can decide how many units to
put on. If you know your largest losing trade amt and you have
determined optimal f, this quotient (#2/#3)is then divided into your
acct size and the result is the number of units for the trade.
You should note that optimal f is not static. As such, bet size will
change from trade to trade.
Ray
> Date: Wed, 11 Aug 2004 03:28:28 -0000
> From: chichungchoi
> Subject: Re: Money Management
>
> Hi Ray:
>
> 1) The account size is $25,000.
> 2) The largest losing trade is $2,050.
> 3) The Optimal f is 27%.
> =============================================================
> 4) $7,592 = ($2,050 / 0.27).
> 5) 3.29 units = $25,000 / $7,592.
> I don¡¦t understand what to do with this step(4) and (5), could you
> please describe more? Does this step only use for comparing two
> system for better performance?
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