backtesting. if the system has had a 90% winning rate in the last 10years it could (possibly) be assumed it has a high winning rate. not alot of information given on the trades so couldnt say. im currently weighing up options on 2 long systems im trading. 1 is way better then the other, but the other 1 still makes money. would be great to hear more on this as im a still a newbie and am thinking about using diff. pos. sizing on the systems.
expectation: A: .9*5-.1*1 = 4.4 B: .51*1-.49*1 = .02 System A, expect $4.4 per $1 risked. System B, expect $.02 per $1 risked. hmm... which to choose, which to choose. Assume you only have $1 and one event to make the choice.. System A has 10% chance of losing it all. System B has 49% chance of losing it all. which to choose. B obviously. I don't know about you, but if I was risking 1%/trade on system B, I would certainly have no problem with changing the risk amount for system A. Particularly over the long run (if it lasted that long). Also, there are assumptions here... I'll assume A was derived over many observations for my answer. However, if I was to trade you a copy of action #1 in mint condition for a pair of your old shoes, I think there would be a 90%+ chance of you accepting. Don't you love hypothetical situations?