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Hello traders today I wanted to share with you my less risky trading method which maybe can become useful for you too.I think this concept allows you to extend your losses and compound your wins a little better. If you are only doing one or 2 good trades then recalculating your risk once a day might be good enough. I think this is based on several trades. It will benefit large or small number of trades but certainly requires some additional leg work. Everyone is entitled to thier own method for sure. It doesn't make a whole lot of difference for me at a small account but may make some drastic changes in higher ones
I just found it very interesting and based on the theory of compounding, beneficial in most cases.
It's mathematics so it will work regardless of risk to reward
The idea is simple, if I gain I compound the gain based on the current amount (100 -> 103) is a 3% gain so on the next trade I risk 2% of 103 which is 2.06
Then if I lose 2% on the next trade I am back down to 102.9588, so now I would risk 2% of that amount, which if I lose, I lose less than if I had maintained a simple amount (such as 2) since now I am under my starting balance
This way loss is mitigated and then once you start getting some good trades going you compound well.
Basically losing streaks become less of a pain and winning streaks become much more lucrative.
Trading is risky so there's not guaranteed method to make profits so always trade the money which you can afford to lose.
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