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Imagine

There are two traders, ๐‰๐จ๐ก๐ง and ๐’๐š๐ฅ๐ฅ๐ฒ.

Both of them start with an account of $1,000.

๐‰๐จ๐ก๐ง is an aggressive trader and he risks $250 on every trade (he might also jump out of a plane without checking if his parachute works).

๐’๐š๐ฅ๐ฅ๐ฒ is a conservative trader and he risks $20 on every trade (he might also have many insurance policies and wear a helmet while sleeping).

Both adopt a trading strategy that wins 50% of the time with an average risk to reward ratio of 1:2.

During the next 8 trades, the results are Lose Lose Lose Lose Win Win Win Win.

Here are the results for ๐‰๐จ๐ก๐ง:

-$250 -$250 -$250 -$250 = BLOWN UP

Here are the results for ๐’๐š๐ฅ๐ฅ๐ฒ:

-$20 -$20 -$20 -$20 +$40 +$40 +$40 +$40 = +$80

So hereโ€™s the deal:

As a trader, you will experience losses regularly, guaranteed.

But with proper risk management, you can control these losses so that they feel like a "ant bite".