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If you have a gambling strategy explain why minimizing E( (profit / loss)^2 ) may or...

If you have a gambling strategy explain why minimizing E( (profit / loss)^2 ) may or may not be what you are interested in doing.

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Answer #1

We should be interested in maximizing E( (profit / loss)^2 ) , not minimizing it

note that profit is in numerator and loss is in denominator

we want to maximize profit and minimize loss

hence maximizing E(profit/loss)^2 will work in favor of both

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