Position sizing methods like Kelly Criterion have an optimal leverage to 'apply' to a specific trade. The way I currently understand it, it is the percentage of your account that you should 'apply' to that trade. But how do you apply it?
When I make a forex trade I look at 3 things:
When I make a forex trade I look at 3 things:
- Risk = Price-Per-Pip x Stoploss Pips
- Notional Value = Volume x Price
- Margin = Notional Value / Broker Account Leverage
Does Kelly tell me how much money I should risk? or how much margin I throw in? or the notional value of the trade?