The trouble with fewer better wagers is that wagers - even very good value ones - can lose. So if you're only making a few of them there's a significant probability of losing overall. Your expected value may be high, but your standard deviation is even higher.
I'd much rather have 10,000 independent bets each with a 0.5% edge than 10 independent bets each with a 20% edge.
I'd much rather have 10,000 independent bets each with a 0.5% edge than 10 independent bets each with a 20% edge.
Not with trading, you want to cut losses quick and let winners run. The model behind Long Term Capital Management, as well as a ton of quant firms that went under this past Q, was the take-a-bunch-of-trades-for-small-profit... and it works until you get a six sigma event (see 2008).
I'd much rather have 10,000 independent bets each with a 0.5% edge than 10 independent bets each with a 20% edge.