A trader who became a world champion by age 22 split $200,000 into four $50,000 accounts and risked only 1% per trade, trading one account per week. A losing month that would have cut a single account by 4% instead cost just one account $2,800 while three stayed flat, preserving capital for recovery.
This is the model that took me from a losing trader to a world champion trader at 22. Let's compare 2 traders. The first one is trading with a $200K account. Me instead, I have 4 $50K accounts. I will still risk 1% in every account, but the difference is this. I will trade one account per week. Let's assume I closed a month at -4% because my strategy went in drawdown that month. I had -7%, +3%, -4%, and +4%. Here instead, I just Gain a minus 4. In a losing month, I made $2.8K and I still have 2 accounts that are safe. Instead, here I will be at $192K. How much did I earn that month? Zero. Of course, this will reward me just if the strategy loses. If the strategy wins, here I will get more money. But what is the interesting thing about this method? What is the power of B of making money the next month? Slower. Slower because it needs to recover drawdown first. The trader A still left 2 accounts in breakeven, so he has more chance to make money the other month.
