A basic secret in investing and gambling
Table to show the required win rate with each risk to reward scenario for breakeven..png)
As you can see there is no need for you to be right more often than you are wrong . If you setup your trades or gambles in such a way that if you are right you gain twice as much as you would lose(in case u r wrong ) you would still make money and you would only need to be right only about 33 % of the time to breakeven.
So it essentially shows us one thing we dont need to predict the future even with 50 % accuracy,by confining ourselfs to only those trades/wagers that have reasonable probability and high risk to reward ratios we can make money.
Most traders overlook this simple fact and focus on being right rather than making money ,also they tend to over trade and hence would inevitably lead to load of their capital.
Happy trading and remember discipline is the key☺️
I was just having a conversation with a couple of coworkers about investment strategy. We are accountants but hold degrees in finance. One of my coworkers will only purchase blue chip stocks because he hates to lose. I on the other hand have a large portion of my investments in cryptos and pot stocks. I tell them I only need to hit it big once. Damn truth!
You are right about hitting it big but it will happen less often but a 1:2 or 1:3 risk reward ratio is not that hard to find especially in longer time frames but since you are into crypto a 1:1000 risk to reward ratio is possible.
Which in case of Bitcoin was 1:500000 and higher ☺️.If you had invested in bitcoin in 2010 you would have multiplied your wealth by 500000 times
Evaluate your crypto investments based on benefits to already existing technologies and incest small pots according to your risk appetite and wait .If you lose nothing changes(provided you risk money u can afford to lose )But if you win you win big ☺️.
thanks for this post...i learnt something...good one