Imagine
There are two traders, ๐๐จ๐ก๐ง ๐๐ง๐ ๐๐๐ฅ๐ฅ๐ฒ.
They both start with a $1,000 account.
๐๐จ๐ก๐ง is an aggressive trader and he risks $250 on each trade (he also probably jumps out of planes without checking if his parachute is working).
๐๐๐ฅ๐ฅ๐ฒ is a conservative trader and she risks $20 on each trade (she also probably has multiple insurance policies and wears a helmet to bed).
Both adopt a trading strategy that wins 50% of the time with an average of 1:2 risk to reward.
Over the next 8 trades, the outcomes are Lose Lose Lose Lose Win Win Win Win.
Hereโs the outcome for ๐๐จ๐ก๐ง:
-$250 -$250 -$250 -$250 = BLOW UP
Hereโs the outcome for ๐๐๐ฅ๐ฅ๐ฒ:
-$20 -$20 โ $20 -$20 +$40 +$40 +$40 +$40 = +$80
So hereโs the deal:
As a trader, youโll encounter losses regularly, guaranteed.
But with proper risk management, you can contain these losses till it feels like an โant biteโ.
๐๐ฎ๐ฌ๐ญ ๐๐ข๐ค๐, ๐๐ก๐๐ซ๐ ๐๐ง๐ ๐ ๐จ๐ฅ๐ฅ๐จ๐ฐ ๐๐จ๐ซ ๐ฆ๐จ๐ซ๐ ๐๐๐ ๐ ๐ธ