Trading basics - a quick poll

How would you allocate your capital between Trade A and Trade B?

  • I would put more capital into Trade A

    Votes: 20 76.9%

  • I would trade them both with identical amounts of capital

    Votes: 6 23.1%
  • Total voters
    26
C

Cutten

Let's say you have two trading opportunities. Trade A has a 90% chance of winning, and will pay out 5 times your risk. Trade B has a 51% chance of winning, and will pay out 1:1 versus the amount you risk.

Would you trade these the same size, or would you put more capital into trade A?
 
Quote from Cutten:

Let's say you have two trading opportunities. Trade A has a 90% chance of winning, and will pay out 5 times your risk. Trade B has a 51% chance of winning, and will pay out 1:1 versus the amount you risk.

Would you trade these the same size, or would you put more capital into trade A?
More...

It depends many factors, as trading just A alone would be also highly possible/ desirable (supposing all other factors being the same).
 
Quote from Cutten:

Let's say you have two trading opportunities. Trade A has a 90% chance of winning, and will pay out 5 times your risk. Trade B has a 51% chance of winning, and will pay out 1:1 versus the amount you risk.

Would you trade these the same size, or would you put more capital into trade A?
More...
Since I wouldn't take Trade B, I guess it follows that I would trade larger size using Trade A.

(Of course, we're assuming fairly specific probabilities and payoffs about future outcomes, which makes the exercise a bit fanciful.)
 
Quote from Cutten:

Let's say you have two trading opportunities. Trade A has a 90% chance of winning, and will pay out 5 times your risk. Trade B has a 51% chance of winning, and will pay out 1:1 versus the amount you risk.

Would you trade these the same size, or would you put more capital into trade A?
More...


For me, I would only do trade A. Combining Trade A and Trade B would only reduce risk of loss by 5.1% at the expense of a much higher return.

Joe.
 
Quote from Cutten:

.....Trade A has a 90% chance of winning.....
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Hmmm.....No trade has a 90% chance of winning (or losing). This should be understood in "trading basics".
 
Quote from BSAM:

Hmmm.....No trade has a 90% chance of winning (or losing). This should be understood in "trading basics".
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Luckily Jack hasn't got a chance to read your this post Yet! :D
 
how often does each occur?? For example, if trade A happens only once per year, and at 90% chance of probability can not be realistically improved, but trade B happens once per day, but at 51% probably has room for improvement, then B would actually be the trade to take....but again the question is how often do these trades come about??
 
Quote from OddTrader:

Probably very soon! :D
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It just occurred to me. I had thought he was claiming "always in and never a loss." In fact, it seems that what he meant was "always in riddles and never at a loss" for words, words and more words.
 
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