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Kelly, drawdown math, the kind of sizing that doesn't blow up
Why 2% risk per trade is a floor, not a ceiling. How to compute Kelly fraction when you don't know the real edge. What max-drawdown actually tells you about a backtest. The math that separates traders from gamblers.
Given your edge and win/loss sizes, Kelly tells you the fraction of bankroll that maximizes compound growth. Bet less = underperform. Bet more = blow up.
Any backtest can show +200% return. The question is: how deep is the pit you had to crawl out of? That's max drawdown.
Rule of thumb: never risk more than 1-2% of equity on a single trade. That defines your position size, not the other way around.