Panda Traders
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Imagine
There are two traders, 𝐉𝐨𝐡𝐧 𝐚𝐧𝐝 𝐒𝐚𝐥𝐥𝐲.
They both start with a $1,000 account.
𝐉𝐨𝐡𝐧 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).
𝐒𝐚𝐥𝐥𝐲 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.
Here’s the outcome for 𝐉𝐨𝐡𝐧:
-$250 -$250 -$250 -$250 = BLOW UP
Here’s the outcome for 𝐒𝐚𝐥𝐥𝐲:
-$20 -$20 – $20 -$20 +$40 +$40 +$40 +$40 = +$80
So here’s the deal:
As a trader, you’ll encounter losses regularly, guaranteed.
But with proper risk management, you can contain these losses till it feels like an “ant bite”.
𝐌𝐮𝐬𝐭 𝐋𝐢𝐤𝐞, 𝐒𝐡𝐚𝐫𝐞 𝐚𝐧𝐝 𝐅𝐨𝐥𝐥𝐨𝐰 𝐟𝐨𝐫 𝐦𝐨𝐫𝐞 𝐈𝐍𝐅𝐎 😸
There are two traders, 𝐉𝐨𝐡𝐧 𝐚𝐧𝐝 𝐒𝐚𝐥𝐥𝐲.
They both start with a $1,000 account.
𝐉𝐨𝐡𝐧 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).
𝐒𝐚𝐥𝐥𝐲 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.
Here’s the outcome for 𝐉𝐨𝐡𝐧:
-$250 -$250 -$250 -$250 = BLOW UP
Here’s the outcome for 𝐒𝐚𝐥𝐥𝐲:
-$20 -$20 – $20 -$20 +$40 +$40 +$40 +$40 = +$80
So here’s the deal:
As a trader, you’ll encounter losses regularly, guaranteed.
But with proper risk management, you can contain these losses till it feels like an “ant bite”.
𝐌𝐮𝐬𝐭 𝐋𝐢𝐤𝐞, 𝐒𝐡𝐚𝐫𝐞 𝐚𝐧𝐝 𝐅𝐨𝐥𝐥𝐨𝐰 𝐟𝐨𝐫 𝐦𝐨𝐫𝐞 𝐈𝐍𝐅𝐎 😸
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