View All num of num Add Photos DRW Trading This employer has taken extra steps to respond to reviews and provide job seekers with accurate company information, photos, and reviews. Interested for your company?Learn More. www.drwtrading.com Profile Unclaimed Overview Reviews Salaries Interviews Jobs Photos Benefits 28 Reviews 47 Salaries 50 Interviews Follow Add Review or Salary Follow Add Review or Salary Interview Question Trader Assistant Interview Chicago, IL DRW Trading I have $1M on hands. You're invited to a gangling game . Tails: Payoff: twice you bet (if you bet $1, you will get $2+ your bet). Heads= you lose your bet. How much would you bet (it's a one-off gamble, no second chance). Tags: trading, trader See more , See less 8 Answer Add Tags Answer Interview Answer 5 Answers ▲ 1 ▼ You have to say that the expectation is positive. Interview Candidate on Dec 3, 2011 ▲ 2 ▼ I actually think that the right answer is to not place a bet. You should only bet when you have an edge (probability of winning is greater than 50%). Matt on Dec 13, 2011 ▲ 1 ▼ to put this in trader language - you are risking 1 unit to make 2 units. While this is enough to put the statistics (positive expectation bet) in your favor requiring a trader to engage (bet), as a trader i prefer to put on trades that have a minimum risk 1 to make 3 units risk vs reward profile. As such, I would not risk more than 1/3 of my gambling money on this bet as this is a one time only bet. So, I would bet 1/3 to 1/4 of the money. rob on Mar 25, 2012 ▲ 1 ▼ I haven't interviewed with them, they hadn't replied to my application. Never the less I found this question interesting so I'm posting.Rob is correct, I think the key is to realize that while we have positive expectancy, that exists only after many many repeated trials. For a one off scenario, we have to look for the best risk reward payoff, which is really a function of our capital constraints and risk tolerance. The spectrum goes from risk adverse to highly risk seeking.1/3 or 1/4 is a rule of thumb used a lot in retail trading but there are plenty of opportunities where 1/5 and even 1/10 can be achieved. For example if it's your first trade, you'd probably have a choice of moving your money into buying a firm below its NAV, creating a convex trade where you have upside and downside buffer. Money management has to be factored in too: if you lose 1/2 your money you have less money in the bank to make up for the losses. Unless the trade was too good to resist versus what I can earn elsewhere, I won't bother with it. Will Fan on May 26, 2012 ▲ 2 ▼ 25%. It is actually well defined nice problem. I'm not a trader but i believe every trader should be familiar with it. Here is the solution:1M is irrelevant (at least mathematically) so suppose you invest x fraction of your wealth. Odds of winning or losing is = 0.5. Easy to check that win-lose leaves you with same money as lose-win sequence. So let's calculate how much you are left with after win-lose or lose-win, it is: 1M*(1+x-2*x^2). It is maximum at x=25%. xeesus on Aug 5, 2012 Add Answers or Comments To comment on this, Sign In or Sign Up.