Risk Equation

Hi all, I've used this formula before, to establish stakeing based on SR for various sports betting systems.

S= Stake % (amount to risk)
n= no of bets/trades
R= Your system or methods Ave strike rate (%of winning trades)

S= 100 / (4 (Log(n)/- Log(1 - R)))

For example you trade 40 weeks a year and have one trade every day. 55% of your trades win. n=200 R=0.55

S= 100/4*(Log(200)/- Log(1 - 0.55)))
S= 100/4*(Log(200)/- Log(0.45)))
S= 100/4*(Log(200)/- Log(0.45)))
S= 100/4*2.30103/0.34679
S=100/26.5412
S=3.76% (Always round this down!)

The two things to note are that a Higher strike rate will raise the stake % While more trades will Lower it (and vice versa)

Do you think this formula bears relevence in the world of trading?

Hi, I used to have a mate called Gasmeter, but I'm not allowed to tell you what he went to court for.

Try applying this to your trading:

http://upload.wikimedia.org/wikipedi...09f13f9395.png.

Of course this can become covariant, if you imagine the [possibility of the] Higgs Boson. In particle physics, it is possible to record particles hitting a target before they are actually emitted. Imagine the advantage if you applied this to your trading.