Hi there,
I have a bit of a problem. Compounding/Exponential systems are good etc, but not if you open more trades at the same time.
Example:
Starting with 10 000$. Risking 5% each trade.
Winning
3 trades starting on the same time will give you 3 x 5% = 1 1500$
Above is not exponential that is linear, exponential is 10 000 x 1.05^3 = 1 1576$
As long as you are winning it is totally fine, but when you are losing it strikes you badly.
Losing
3 trades starting on the same time will give you 3 x -5% = 8 500$
Above again is not exponential it is linear, exponential should be 10 000 x .95^5 = 8 573$
Maybe you will say: mwah, that's not that big of a deal. But in the long run it really hurts you. Because the draw down is always higher then the gain.
What are you thoughts?
-Jysticim
I have a bit of a problem. Compounding/Exponential systems are good etc, but not if you open more trades at the same time.
Example:
Starting with 10 000$. Risking 5% each trade.
Winning
3 trades starting on the same time will give you 3 x 5% = 1 1500$
Above is not exponential that is linear, exponential is 10 000 x 1.05^3 = 1 1576$
As long as you are winning it is totally fine, but when you are losing it strikes you badly.
Losing
3 trades starting on the same time will give you 3 x -5% = 8 500$
Above again is not exponential it is linear, exponential should be 10 000 x .95^5 = 8 573$
Maybe you will say: mwah, that's not that big of a deal. But in the long run it really hurts you. Because the draw down is always higher then the gain.
What are you thoughts?
-Jysticim