Risking Less Equals More Profit

Discussion in 'Trading' started by xBoba, Sep 20, 2012.

  1. xBoba


    I just came upon a video on Youtube talking about how one makes more money by trading smaller. I've never thought about it that way and thought that it made a lot of sense to me.

    Basically, he's saying that your losing trades have a GREATER impact than your winning trades even if the returns offset each other.

    So for example... You invest....

    $10k and get a -20% return (LOSING TRADE), you're down to : $8K

    Using the 8K to make another trade.......

    $8K and get a +20% return this time (WINNING TRADE), you're up $9.6K

    Even though you lost -20% and made back +20%, you're down $400. You'd have to get a greater return on the winning trade in order to break even.

    Here's the video: http://www.youtube.com/watch?v=MUfdEO1muiw
    What are your inputs?
  2. If you have draw down then stop and find another strategy. regards