I think trading is an exercise in compounding, compounding doesn’t work without an appreciation of risk/reward.
They say a successful trader does nothing more than turn ‘low risk’ into ‘acceptable return’ through ‘frequency of trade’ then lets time work its magic off the back of a simple learned behaviour. (I have NFI who 'they' are.
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Just say you have $10,000 as initial investment, 50% per year gives you around $850,000 after your 1
st decade of trading. Is 50% pa when leveraging ‘low risk’ through frequency of trade too high?
If that’s what you are TRYING to do not at all, you have already realized your 2 greatest enemies are greed and greed.
If STT that’s 10 x 5% trades pa, DTing say 25 x 2% trades per annum. Actually, less trades as compounding has an effect within a year, let alone ten, obviously as your account grows your trade size will be a decreasing % of total portfolio but by then you have experience to protect you.
50% might be excessive in last few years as your account gains critical mass but even 30% in last few years of your trading decade will put you well above the $500k mark.
Sure there’s the ATO and your going to stuff some trades up, low risk though has the advantage of losses being benign, you will just have to trade a few times more to compensate.
Anyway just a thought, you need to be aware of what you are actually trying to achieve over time, as time will determine your wealth outcome not your last trade. Anyone with an IQ > 25 can poke holes in above with a few ‘yeah but what abouts” but more a mindset thing, be aware of the power of the mathematical certainty of compounding and the leverage of frequency of trade when applied in a low risk environment.
Do I trade to above, NO but over time my strategy is starting to fall into line. Above about trading not investing.
