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?
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?