The opinions expressed in these forums do not represent those of C2, and any discussion of profit/loss
is not indicative of future performance or success.
There is a substantial risk of loss in trading. You should therefore carefully consider
whether such trading is suitable for you in light of your financial condition. You should read,
understand, and consider the Risk Disclosure Statement that is provided by your broker
before you consider trading. Most people who trade lose money.
Yes, you did say that “there isn’t one metric”, but then you started to talk about maximum drawdowns, the financial instruments being traded, length of drawdowns, etc…
Granted, these metrics are important, but they have very little to do with the only two definitions of leverage, as mentioned above.
The right (optimal) leverage can only be found via the backtest, there is no other way.
In the Head/Tail example, the optimal move (leverage) is to risk exactly 25% of capital before throwing the coin. Any other leverage rapidly decreases the profitability of the system.
Even worse, at 51% leverage we transform an otherwise winning game with a positive mathematical expectancy into a losing game.