Comments by "Magic Beans" (@Magic_beans_) on "How Does Leverage Affect Trading Returns? The Kelly Criterion | Coffeezilla Follow-up" video.

  1. Exactly. If you have no edge, why bother? When the house has an edge, on average the longer you play the more you’ll lose.
    1
  2. No, for an even-odds bet with binary outcomes it’s (2 * p) - 1 where p is your odds of winning. In the case you propose you should bet (2 * .9) - 1 or 80%. You may lose a bunch at once, but you’d recover with 3-4 consecutive wins, which is more likely to happen than not. Another way you could figure it is the difference between your chance of winning and your chance of losing: p - (1 - p), which gets us back to 2p - 1. (And as our host said, for investments you should probably cap your exposure at no more than half that number because investments aren’t binary.)
    1