stock market math problem

[alphatrader]

hi, I'm a stock market student trying to get the best possible combination of open trades and risk to take on my trades, i only have a high school degree i don't know complex statistics,


I can have 2-5 open positions in one day, all positions are equal in size and use the total(100%) of the 10,000$ portfolio what is the ideal number of open positions statistically knowing that I could have 2 positions, 3 positions, 4 positions or 5 positions, my chances of finishing the day with a positive gain for each position individually is 42%.

now let's assume at least one of the open positions will generate 25% + return, and at least one will end up with a 20% loss. the maximum loss for all positions combined in a day is 20% before i close all positions and the maximum win is 100% for a day, there is about 50 days in a year where this strategy is works,

what is the ideal setup to maximize risk/reward with the highest probability of big gains


* the reason at least one of the positions will generate 25% is because I only do this kind of trade when high probability pattern appears with a 95% accuracy rate

 

[JeffM]

Your problem is not nearly well enough specified to give an answer, and a lot of the math used on Wall Street these days is quite advanced. But your 42% problem can sort of be answered.

Your best chance of having more wins then losses is with 3 positions at about a 38% probability. Now this may not be a completely informative answer if the gains on winning materially exceed the losses on losing.