With a winning rate of about 40%, the probability of three consecutive losses is 21.6%.
For investors with less capital, the most sensible choice is to accumulate capital through down-to-earth work, rather than expecting to make quick profits by risking a lot in a highly speculative market.
Because of the small capital, the risk resistance is poor, and it is more susceptible to short-term price fluctuations. Novice traders tend to trade frequently, change positions frequently, and buy at the bottom and sell at the top, which are all high-risk and low-winning operations. Calculated at a winning rate of 40%, the probability of three consecutive losses is 21.6%, which is enough to make many people lose the funds to continue operating.
Therefore, it is more reasonable to accumulate enough capital before entering the market.
What is the minimum capital?
Formula: Minimum capital = Maximum tolerable loss per transaction ÷ Risk percentage per transaction
Maximum tolerable loss per transaction = acceptable loss in mentality.