I just returned from a gathering with a group of traders, and one of them shared a very interesting concept today - The Kelly Criterion. I'm no expert on it... so decided to google it and you can read up about it here.
Under money management, there are two schools of thought - Fixed Fractional Method and Fixed Ratio Method. For both methods, one needs to decide what is the position size to trade. Under Fixed Fractional Method, there's what's called an "optimal F" which is generally achievable only on hindsight. So Kelly Criteron comes in nicely to help determine what kind of market exposure you can take on your trade. Interesting stuff... new to me still, and something you might want to explore.
Cheers!
Technical Analysis of the Forex Spot Markets using Elliott Waves, Chart Patterns, Candlesticks and other tools. Disclaimer: None of the comments in this blog shall be construed as professional trading or investment advice.
