Youtube clip for Kelly formula

Discussion in 'Risk Management' started by jk90029, May 3, 2015.

  1. Dear-

    An interesting clip was found



    for a beginner lesson.

    IMHO, there might be huge profit difference in equity trading, with understanding and use of the Kelly.
     
  2. Following Kelly gives you NO bankrupcy at all. (?)
     
  3. Roughly at 12 min in the above clip, he is talking about compounding / at 35 min about doubling time.
     
    Last edited: May 3, 2015
  4. Another interesting clip is



    Suppose profit rate is annually 20% compounded, it takes less than 4 years by 1.2^4 = 2.0736 with extra annual dividend for equity.
     
  5. Last edited: May 3, 2015
  6. Yes this is true if you follow kelly, you can save yourself from getting affected from the bankruptcy. And these video tutorials are also supportive in the better understanding.
     

  7. Maybe, among all the strategies with NO possible bankrupcy, Kelly might be the best rewarding, in terms of long-term compounding. The book explains in detail, page 99 and page 232.

    However, since Kelly does not asks margin and leverage, long-term profit is NOT as much as many traders (probably stupid 90% traders) expected.
    There might be a better strategy than Kelly. If you think so, tell me now.