## trade

## Optimal Market Exposure

Having established in the previous post (Logarithmic Utility of Wealth) that the utility of a rational, small, long-term trader’s account is logarithmic in the account’s size, we are in a position to mathematically optimize how much risk (exposure) the trader should take on a given opportunity. We do this simply by maximizing expected utility with […]

## Logarithmic Wealth Utility

The previous post (Utility Function of Wealth) discussed and described the typical general shape of the utility function of wealth, and touched on some applications. Here, we will consider a special case, with an exact curve. Consider a rational trader – a trader that is emotionally detached from his account, and whose objective is to […]