Would you ever trade a high probability, high risk method?

C

clambill

I mean let's say if you could be right 80% or more of the time but your risk/reward ratio would be like 4:1. In other words, you'd be risking $4 to make $1.

Anybody have an idea how you would manage the trades?
 
i dont get it. So lets say:

80% or 4 out of 5 times you make $1 = $4

20% or 1 out of 5 times you lose = $4

this doesn't have positive expectancy.
 
Quote from sjfan:

Why not? Just trade a 1/4 your account size and keep the rest in cash and thereby deleverage the strategy.
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Eventually at that rate $4 =$1, you will end up negative.
You have 8 winners ina row at $1 each and two losses at $4 each = $0. then you have commission and time....A osing proposition
 
Quote from Compulsive:

Eventually at that rate $4 =$1, you will end up negative.
You have 8 winners ina row at $1 each and two losses at $4 each = $0. then you have commission and time....A osing proposition
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Ah. I assumed he'd be posting a strategy with positive expectancy - otherwise what's the point of event wondering about this strategy.
 
Quote from clambill:

I mean let's say if you could be right 80% or more of the time but your risk/reward ratio would be like 4:1. In other words, you'd be risking $4 to make $1.

Anybody have an idea how you would manage the trades?
More...

Sounds like a typical option-premium selling strategy in the form of verticals/iron condors.
 
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