1 - Introuction
All the traders know that money management is one of the keys (or even the primary key) to be a successful trader.
Neither the best trader in the world will dispense some rules or strategy of money management!
So all know the basic of money managemnt (if not, you should already know) like know the principles of Risk to Rewar etc...
Today i will share (if you want you can googlit and you will find many articles) one advanced "strategy", called Kelly Criterion.
2 - What is Kelly Criterion?
Kelly Criterion is an advanced strategy that will help to know how much you can risk on each new position based with similar traders in the past.
3 - Who invented?
Kelly Criterion was developed by John Larry Kelly Jr. (1923–1965), was a scientist who worked at Bell Labs.
Image 1 - John Larry Kelly Jr
4 - The Kelly Criterion
One thing you must understand when using the Kelly criterion is that this is a method used for diversification. Traders and investors have different preferences as to how they manage their equity. Some traders will use the Kelly criterion to base an individual trade or investment on, whilst others will use this method to allocate a percentage of th…