Hi Chump,chump said:FX,
"If you have an edge, it is a mathematical fact that you will do better by taking as many trades as possible
" ...not necessarily although I understand what you are trying to say with this.... when you have an edge what is a mathematical fact is that your return will be higher by applying the maximum financial muscle to that edge that your system will permit. Whilst that might mean taking more trades it could equally be true that taking the same number of trades with more size might hold true. It depends on how your edge is constructed surely ?
In terms of the pure maths, it doesn't depend on anything. For example, if you have a system that wins X% of the time and Loses Y% of the time, where X is greater than Y and the wins and losses are the same size S, then you will always make more money by taking more trades. You can decide to bet more instead but, in normal cercumstances, you will do worse than someone who gets a lot of opportunities to trade. In addition, you can bet more (and more often) and you will make a lot more money as a result.
I am mindful of the fact that the picture will look different if you introduce psychological factors such as risk tolerance into the equation. But on a purely mathematical level, for a system that is profitable, the more you trade the better off you will be.