**High % Risk and Compunding**
Anyone tried using or uses high % risk?
I will be taking 20% of account to use for high risk with the aim of compunding (I may as well put my signature to use).
My account has 100:1 leverage and if I have worked it out correctly then to get a margin call at the point my SL is hit is given by:
SL/(100 + SL) SL = stop loss in pips.
So with a 25pip SL the most I can risk is 20%, with SL = 100pips it would be 50%, but using SL = 25pips, 100pip gain is 80% account and 50% acount growth with 100 pip SL.
Kelly's number gives the % to risk for optimal growth if you know the probabilities of win, loss, or breakeven:
Fraction to bet F = (R*W-L)/R(W+L)
average growth per trade y = [(1+FR)^W]*[(1-f)^L]
Account growth after N trades = y^N
R = Reward (as in 1:3 etc)
W = probability of win
L = probability of loss
Alternatively if you are going to risk a certain fraction, its easy to calculate the minimum W needed.
So if your W = 55%, L=45% then for R = 1, F = 10% and average trade makes 1.005 gain. |