I believe the argument is even stronger (that there is no relation between confidence and accuracy) in sports betting. I can't take any handicapper seriously who has different levels of 'star' wagers. It's ridiculous.

followed you each week on these newsletters. This has been your best one so far. Any chance we could see the table that you speak of in Chapter 11? If the answer is buy the book and see. I totally get it :)

Brent, do you have thoughts on reworking the % of capital to risk formula you laid out to instead calculate the breakeven expected value probability given a trade's risk/reward in place of the win% and avg. win/loss? You could then assess whether you think the trade has a higher probability of working out than the breakeven and size accordingly. This sort of gets at the core of the kelly criterion directionally and provides a rough guide on when you may want to size up/down or sit a trade out.

Example: for an expected value of 0 by risking 1 to make 3 the probability would be 25%. If you think the odds are more like 30% you would take the bet. If you think they're more like 35% you put more at risk.

It doesn't account for outcomes in between the target and stop but I suppose you could find a way to incorporate a distribution if you were up for it

% of Capital to Risk = Win% - ((1-Win%)/(AverageWin/AverageLoss))

Could you please point me to its origins in academic research or something? To be honest, I'm not a fan, primarily because in the limit AverageLoss --> 0 it tells you to invest only 50%. Clearly a wrong answer.

Good stuff.

I believe the argument is even stronger (that there is no relation between confidence and accuracy) in sports betting. I can't take any handicapper seriously who has different levels of 'star' wagers. It's ridiculous.

Awesome post again, Thanks!

Brent, how do you size for longer term trades eg 6 months? You'd naturally want a bigger payout for a long wait like that?

followed you each week on these newsletters. This has been your best one so far. Any chance we could see the table that you speak of in Chapter 11? If the answer is buy the book and see. I totally get it :)

Great topic. Love to see the results of the survey.

Brent, do you have thoughts on reworking the % of capital to risk formula you laid out to instead calculate the breakeven expected value probability given a trade's risk/reward in place of the win% and avg. win/loss? You could then assess whether you think the trade has a higher probability of working out than the breakeven and size accordingly. This sort of gets at the core of the kelly criterion directionally and provides a rough guide on when you may want to size up/down or sit a trade out.

Example: for an expected value of 0 by risking 1 to make 3 the probability would be 25%. If you think the odds are more like 30% you would take the bet. If you think they're more like 35% you put more at risk.

It doesn't account for outcomes in between the target and stop but I suppose you could find a way to incorporate a distribution if you were up for it

Hi Brent,

I am intrigued by the formula

% of Capital to Risk = Win% - ((1-Win%)/(AverageWin/AverageLoss))

Could you please point me to its origins in academic research or something? To be honest, I'm not a fan, primarily because in the limit AverageLoss --> 0 it tells you to invest only 50%. Clearly a wrong answer.