Capital To Trade = ?

...continued from yesterday

World Cup trading contest winner Larry Williams described his formula as a variation of the Kelly formula popularized by Ralph Vince.

Capital To Trade
= (Win/Loss Amount Ratio + 1) / (System Accuracy – 1)

Note that the formula he actually used is a variation, and not the original version, of the above formula.

The money management formulae mentioned in this week’s series of articles are based on information contained in the book Secrets of the World Cup Advisors.

Larry Williams has a book in which he devotes an entire chapter to describing his current thinking on the Kelly formula and how he derives his current formula for calculating how many contracts to use on his next trade. That book is entitled Long-Term Secrets to Short-Term Trading.

continued tomorrow ...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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