Let's assume we have a strategy which has the following odds:
- 70% chance to win 100 pips
- 30% chance to lose 100 pips
So let's keep it that simple, you either lose or win 100 pips, 1 trade at a time.
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So here are 3 questions waiting to get answered:
Question 1:
What is the optimal % of our account-equity we should risk each trade to gain as much as possible?
Question 2:
Our goal is to get 100% return (example: turn $100 to $200).
We always use the "updated" % of our current full account balance/equity before each trade (compounding returns).
How much % should we risk each trade, to get the 100% return?
What would the average drawdown be?
Of course, we want to have that 100% return with as few trades as possible (fastest).
Question 3:
If we risk 100% of our equity each trade (Starting with $100, 70% chance to double account to $200, 30% chance to lose it all. if we win, we go on and try to double that $200 to $400 and so on. until we fail), how high would our account on average be before losing it all?
Any answers of math wizards or statisticians appreciated . It would be nice if you could tell how you calculated your (best) value or optimal values (if it's not too complicated )