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The law of large numbers #1

The law of large numbers #1

In a fair coin toss, the probability of head and tail is 50%:50%. Why then, as i does this coin toss once, it ends up with real life result as 100% head and does not resembles at all - the initial probability value? Take a moment to think about

The Downfall #2 Drawdown

The Downfall #2 Drawdown

Drawdown is your biggest loss of capital over a period of time. To calculate, simply take the highest point - lowest point / highest point. With the example above, the highest point is $10,000, lowest point is $7,500. Take (10000-7500)/10000 you will get 0.25. Which translate to

Determine the value of your trade

Determine the value of your trade

Trade Value Calculator Win Probability (%): Reward Ratio: Risk Size (%): Calculate Trade Value: Trade Value: Second Output: Capital Growth Simulation Enter your base capital: Simulate Growth Final Capital: $ Percentage Change:

Many small trades or few big investment?

Many small trades or few big investment?

Some people think that short term trading are simply gambling. Investment is different where you have done your study, you buy a stock and can leave it as it grows over the years. Think again. If done correctly, hundreds of small trades can be a more stable investment and at

The Power of Compounding #3

The Power of Compounding #3

With the previous examples, we can see that no matter the size, Compounding will eventually overtake simple increment. It's just a matter of time. Another important thing to take note, is when you have a losing streak, risking in simple amount can wipe you out. If you have

The Downfall

The Downfall

Don't bet when you have negative expectation. Although the above sentence seems to be such a basic information, one probably need to do some math to fully appreciate the simplicity and precision of the message. I always tell others, regarding gambling, that you essentially only have two gains

Inflation is compounding, too...

Inflation is compounding, too...

In my ideal world, currency should deflate. Think about it this way, if the currency in circulation stays the same, and productivity grows as each of us improves in our skills, knowledge and technology used, the same dollar should have more buying power year after year... right? Why then, does