Your win rate already decides the rest

Expected value: would you play this game?

Ten cards. Seven lose you a dollar, three win you three. You lose most turns, but −$7 + $9 = +$2 every ten rounds. That is +$0.20 per round: expected value.

Positive? Keep playing. Negative? Walk away. Casinos live by this rule.

Win rate: have you tested yours?

Ten trades will not tell you. At a true 30%, ten trades usually show anywhere from 10% to 50%. A hundred trades narrow it to about 22% to 38%. More is better.

And even at 30%, ten losses in a row is normal in 100 trades, and about 6% of runs hit 17 or more. Annoying? Yes. A broken strategy? No.

Equity curve: know your minimum risk:reward

Win three out of ten, and each win has to cover more than two losses. At 30%, break-even is about 2.33 times your loss. At 3:1, the middle line climbs steadily.

The top line is the best 5% of runs and the bottom line is the worst 5%. Plan for the bottom one.

Risk:reward: a low win rate can still work

Same 30% win rate, different payoffs, averaged over 100 trades. Rare wins are fine, if they are big ones.

Kelly criterion: how much to bet

Bet too much and one bad streak wipes you out. The Kelly criterion finds the sweet spot: f = win rate − loss rate ÷ R:R. At 30% and 3:1, that is 0.3 − 0.7 ÷ 3 = 6.7%.

Bet more and growth slows down. Past about 14%, the account shrinks.

Position size: same trades, different sizes

The same 200 trades at three sizes. 2% is slow and steady. Kelly at 6.7% grew the account the most. 20% hit ×17, then crashed to ×0.19.

Kelly swings hard too, so many traders bet about half, around 3%. Your win rate and risk:reward decide your size.