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Tuesday, March 11, 2008

Money Management: The Psychology and Impact of Accuracy

Challenge Accounts:

Investing Account Balance: $201.46

Stock / Futures Trading Balance: $684.39
Online Savings Balance: $12.07


In the previous entry, I discussed how important it is to consider commissions if you are a low funded trader, and how it relates to your account size with a given time period.

Although I have discussed Accuracy rates previously? I thought it best to examine them a bit differently, once again. How accuracy relates to your account size, and the psychological impact that accuracy rates have on your trading.


Your accuracy rate equates to your account size. The smaller your account? The less wiggle room you have until your drawdown kill switch should be hit, and the less room you have until you are in the danger of overtrading.

* * *

Investing Account Balance: $201.46
Stock / Futures Trading Balance: $684.39
Online Savings Balance: $12.07


Total Trades and Investments: 3
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $82.56
Average Loss: $82.56
Accuracy Rate: 33%
Average Reward: $179.75
Risk : Reward Ratio: 1 : 2.02

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research and tolerance for risk.

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