Why losses are harder to recover, the larger they become
In our previous article we discussed the importance of stop losses. We will expand on that topic and display mathematically why losses become harder to recover the larger they become. The main reason is the capital available to be invested decreases and hence a higher percentage gain is needed just to break even. Here’s a mathematical example which shows why large losses are so damaging and hard to recover from. Example: Loss vs Recovery Percentage Assume you start with $100,000 …
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