Let’s see the effect of losing some of your capital:
For e.g., you invested $1000 and made 10% profit = $1100
If you lost 5% initially, $1000 – 5% = $950,
You need higher earnings to reach $1100, (1100 – 950)/950 = 15.8% (as compared to 10% if you did not lose part of your capital)
Most likely, you would take more time to make that profit, which the time wasted could have helped you compound your capital further.
Thus, it is very important to know what you are doing when you are investing your money. Even though we cannot be certain how things will turn out, we must make sure we have an edge or advantage of winning. If you are not sure or not confident over an investment opportuniy, remember rule no.1 and refrain from putting your money in!
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Interviews with Singapore stocks, forex, futures and options traders and trainers! This book is written for you:
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- know your trainers before attending their courses
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