Allocating risk properly when the odds are in your favor is key in poker. Love that quote! Sizing cannot be uniform for all opportunities. You need to bet the odds.
A uniform probability distribution has a slope = 0, or id a horizontal line. Whereas stock prices, espec short term prices, are nonlinear. This means returns are lumpy until consistency is reached...
It was a great read Gents. I hope you read all of the book. For me, and I mentioned this to Steve n Mike in an email a few weeks ago, in game planning, perhaps having a decision tree ( basically using a Bayes like approach although we don't have the exact numbers to calculate the conditional probabilities) for a set up. From the SMB "Catalyst-setup-trade" include a P(U | Market ) = 0.65 or P ( D | M ) = 0.20 and the rest (0.15) is an error term...... Where M = current market conditions and P(U) = probability of up and D, down.... Its a great way to think. So, my big take away from the book was to lay out 2 - 3 probabilities for an expected move given market conditions at a given point in time and/or for an evolving time period for say a swing trade......