End Screen Video: https://tradingrush.net/reinvesting-illusion/

I made ten thousand trading bots take one hundred thousand trades at the same time.
Why?
To find out if a high 80% win rate can blow up the account.

(show_more)

Why 80% win rate?
I don’t know my cat walked on the keyboard
These are the account balances of ten thousand trading bots.
I used a 0.25 to 1 reward-risk ratio.
Why?
Because we all know that high win rates can mainly be achieved with a low reward-risk ratio.
If you have a high win rate high reward strategy, call me.
With this reward-risk ratio, an 80% win rate is break-even.
It shouldn’t lose money, right?
The risk per trade is 2%.
It really shouldn’t lose money, right?
Nope. Someone has already lost 99% of the account in just 400 trades.
0.01% of trading bots just blew up the account.
That doesn’t sound bad, right?
Hold on.
0.36% lost everything before 1000 trades.
It’s still increasing.
More than 1% blew up before 1500 trades.
15% are big losers at 5000 trades.
30% of traders are crying at ten thousand trades.
41%, 52%, 65%, 71%.
Almost 75% of traders lost their entire trading account before a hundred thousand trades.
I was going to do 1 million trades, but my computer basically started doing this when I tried.
But based on the current trend, I bet most traders will blow up the account eventually.
Why did this happen even with such a high win rate?
Two reasons.
Number One.
Most people recommend risking 1 to 2% of their account per trade.
But that clearly doesn’t save your account 100% of the time.
Every high-win rate strategy always has some probability of losing everything.
A 1 to 2% risk with a high win rate only has around a 0.36% probability of blowing up the account at around 1000 trades.
But this blowing up risk increases with more trades.
You will need to risk a very low percentage of the account per trade to really remove the risk of losing everything.
The second reason is that I used the old risk management rules.
The risk per trade I used was 2% of the starting account balance.
Why is it old?
Because I used them before finding the new and better ones.
The new risk management rules I found were the turtle trading rules.
Instead of the starting account balance, you risk 2% of the current account balance
This greatly reduces the probability of blowing up the account.