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In my previous email, you discovered how to grow a $5,000 account (safely and consistently). Now, what if your account is $10,000 or more? Even better! You've officially graduated from "ramen noodles every night" to "ramen noodles with an egg." But first, you must make sure these things are in order…
Once you have these nailed down, then it’s time to have… Multiple trading systems When you have multiple trading systems, you’ll improve your risk-adjusted returns. This is something 90% don’t understand, so let me explain… Risk-adjusted returns refer to how much you earn relative to the risk you are taking. It's like asking: "Would you rather earn $100 by walking across the street, or earn $100 by walking across a highway blindfolded?" Same money, very different risk levels. An example… let’s say you have 2 trading systems, A and B.
So, which offers a better risk-adjusted return? One way to define it is: annual return / maximum drawdown So, you have… A = 0.33 B = 0.5 In this case, trading system B offers a better risk-adjusted return. That’s because you can use 3x leverage and get a 30% return with a maximum drawdown of 60% (compared to A with a 20% return). Now you might be wondering: “How do two trading strategies improve your risk-adjusted returns? Look at the table below… What you’re seeing are the results of three trading systems. On its own, they all have losing years. But when you combine them (meaning 1/3 of your capital to each trading system), you reduce the chance of having a losing year. That’s because when one trading system underperforms, you still have another that could be profitable. This reduces your losses and the chance of having a losing year (unlike my hairline, which loses every single year with no backup plan). And finally… Manage your expectations $10,000 is not life-changing money. It’s not enough to retire. It’s not enough to trade full-time. It’s not enough to give you financial freedom. But it’s enough to get started, to compound your returns, and grow your account to 7-figures over time. The keyword here is.. time. Here’s a real-world case study to explain… As you know, Warren Buffett is the world’s greatest investor. But do you know that 99% of his wealth came after he turned 65 years old? If he had stopped investing at 65, you probably wouldn’t even hear of him today. That’s how compounding works. Slow, insignificant, and then unstoppable. Kind of like how my love handles grew—barely noticeable at first, then BAM! Suddenly, I need new pants. Cheers, Rayner “still=waiting-for-his-hair-growth” Teo P.S. I'll be hosting a webinar where you'll learn how to grow your account to 7-figures and beyond (using rule-based trading strategies). Details here. |