Originally Posted by SIMBA

Lietuve,

Kelly stands for Kelly Ratio,if you google it you will get lots of information on it...If you search this Forum you will get most of it.
Basically,based on your win/loss ratio and average win versus average loss relative sizes,the Kelly ratio is the "optimal "size ,as account %,you should risk per trade to maximize returns without blowing(halving) the account...

Caveat Emptor,this is all theoretical,and experience shows that what kills this MM system is maximum adverse excursion,so,many traders have resorted to use "half Kelly" or "a third of kelly" to manage their positions..which is good only as long as their max adverse OPEN loss is not bigger than double their average CLOSED loss and their max cumulative drawdown can stand the position size...

Interesting concepts you can Google,besides Kelly ratio, are Fixed ratio and Risk of Ruin...AND my favourite..APD(Average closed Profit to open Drawdown)which is the key to size the position you should be trading.

PS:Interesting that some top honcho at VOLVO preaches taking risks

Regards
Simba