STTrading Long weekend thread 8th, 9th and 10th of June 2024, page-8

hi Ibza

i like a formulated method to position so i like the Kelly criterion.
https://www.investopedia.com/terms/k/kellycriterion.asp

1. first thing is track you last X trades to workout your winrate and winratio.

lets say im using a breakout strategy and over time i have calculated a
(win rate and winratio definition in link).

winrate 55%
winratio 1.4

kelly = winrate - ((1 - winrate) / winlossratio)
kelly = .55 -((1-.55)/1.4)
kelly = .23

so i would use 23% of your portfolio on that strategy

Thats ok for short term but for me as someone who like to scalp i use a dollar value per pip. like a 50 to 100 dollars per pip.
this way no matter what price the stock is i can control my risk better.

hope it makes sense.