[Dogpile]

So if Win 53% and win $ vs loss $ is 1.0 (equal):

Kelly Criterion suggests you bet 6% of your bankroll on each trade.

So if Expected Win % is 65% and win $ vs loss $ is 0.9 (equal):

Kelly Criterion suggests you bet 26.1% of your bankroll on each trade.

You can simulate this in excel by having it generate random numbers and excel can project the next 10,000 or 100,000 trades -- simply by taking your percentage win rate. You can then graph the results. The variance is absolutely sick. I suggest you do this long before you ever consider this as a money management technique because you wouldn't be able to stomach it.

The Kelly forumula is an interesting one to observe though. It is a nice mathematical way to show the interraction of % vs dollars won.

Personally, I think the key to trading is to get your % very high first with very reasonable 'stops'. This takes a long time. But once you do this, you can simply leverage your trades and grow capital without big variance.

Variance is a subject that is just hard for people to really comprehend. If your win rate is low and you seek big wins... you can just go on some awful streaks as the variance associated with low % plays out over time.