You better start with this: url Minimax theorem The minimax theorem states: For every two-person, zero-sum game with finite strategies, there exists a value V and a mixed strategy for each player, such that (a) Given player 2's strategy, the best ...

Optimized Risk vs Reward Equation

hmm, it's about averaging down, we are talking about averaging up. Don't like? Don't read. Posting irrelevant math helps me to better understand the problem by attacking it from different angles. The advantage of forum over plain paper is that I can ...

Optimized Risk vs Reward Equation

I'm an idiot. This could be calculated easier with the ellipse. The area under the curve is always half the area of the ellipse. image And of course, there is only one point where the profit is at it's peak (or risk at it's bottom). ps. I know ...

Optimized Risk vs Reward Equation

Here's a few thoughts on risk graph. The risk is a function of length and stop loss. We have our entry point, a stop loss point and a point where the risk is 0%. Now, I do not know the ideal rate of change for the risk, but I do know where I should ...

Optimized Risk vs Reward Equation

Well, here's the first attempt at the first problem. Given the initial balance and risk size, there exists a finite number of lot and stop loss sizes. If we punch balance, risk, preferred stop loss and lot size, we'll get something like attached ...

Optimized Risk vs Reward Equation

hmm, we'll need another roof equation that will test all possible rates of change of the rates of change. It also has to allow us the best starting conditions for the variable risk appetite (for example, what's the best starting condition for 1% ...

Optimized Risk vs Reward Equation

The problem is (twoblink mentioned this before) that we determine this man/woman ratio (stop loss and lot size) before we enter the transaction. We can then use the equation to get the best result possible but we do not know if our first ratio ...

Optimized Risk vs Reward Equation

The derivative of a function y = f(x) is the limit of delta y over delta x as delta x approaches zero.

Optimized Risk vs Reward Equation

(quoted from The Limit of Delta Y Over Delta X) She whispered. ``He scares me," and if Jimmy heard, he gave no clue. He said, ``While we are waiting, I will explain how the derivative of a function works." Sally taunted, ``a2+b2equals ______ all?" ...

Optimized Risk vs Reward Equation

Well, It's a combination of interesting problem (just like the Rubik cube and 22 moves solution; btw. - have you tried the Rubik clock?), mixed with something that is extremely useful, and not just in currency trading.

Optimized Risk vs Reward Equation

These two spreadsheets will help you to visualize and calculate area under the curve.

Optimized Risk vs Reward Equation

The integral as a sum We can think of integration as the result of taking a limit. This diagram might make it clearer: image Before, when we were differentiating, we were trying to find the slope of the curve of Y(X), which was dY/dX. Now we know ...

Optimized Risk vs Reward Equation

The area under a curve as a sum Here's the curve of some function called f(X) between X=0 and X=10. I've divided the area under the curve into columns of width dX. image The area under the curve, i.e. the area between the curve and the X-axis, is ...

Optimized Risk vs Reward Equation

We talked about infinite series. They are convergent if they have a limit. Here's how to calculate the sum of infinite series. We want to calculate all possible distances between a and b and all possible lot sizes between x (starting lot) and 0 ...

Optimized Risk vs Reward Equation

hmm, are we looking for something like this, only with two variables? image image url pdf shows the properties of this function and expansion at x=0. I wonder if we are looking for the series expansion at saddle point.

Optimized Risk vs Reward Equation

hmm, the two variable function that has saddle and inflection points represented as an convergent continued fraction looks suspicious. In that case, the function's equation changes whenever we want to add new entry, and we are always looking for the ...

Optimized Risk vs Reward Equation

When a graph of two variables is a straight line passing through the origin, the variables are directly proportional to each other. As one variable increases, the other variable increases/decreases at a constant rate. The constant rate is determined ...

Optimized Risk vs Reward Equation

well, I'm using the daily and weekly, so I can invest 99% of my time into solving the equation. And it is not intellectual, it is very down to earth. I want to be a better trader and compounding is the only realistic way of earning substantial sums ...

Optimized Risk vs Reward Equation

here's the one that has both phi and e image

Optimized Risk vs Reward Equation

this section explains how to calculate convergent continued fractions image

Optimized Risk vs Reward Equation