The Trader’s Bell Curve
Let’s examine a classic bell curve…
Then think about the top 1% “tail” at each extreme in terms of trading and investing profits…
On the right we have high accuracy traders, who make tons of money by flipping tons of trades...
Their risk to reward ratios are low, but their accuracy is high.
Each losing trade wipes out a few winners, but the losses are far and few between.
On the left, we have the high risk to reward traders, who make tons of money by carefully selecting and filtering trades that offer small risks but huge rewards...
Their risk to reward ratios are large, but their accuracy or trade frequency is low.
They rarely trade, because their filtration methodology keeps saying “not yet”…but when they do take a trade that wins, its a big payday and their wins wipe out many losers.
They are both VERY VERY profitable
…But to ask which is better is not really the appropriate question.
It would be like asking if it would be better to own a McDonald's or be a high end real estate agent?
The McDonald's makes only a tiny amount of money per transaction, but they do a TON of transactions each day. Each day there are profits and the level, size, scope of the profits are consistent and forecastable...
They make money on volume not margin…
Now on the other hand, the high end real estate agent rarely sells a property, and spends a lot of time communicating with and courting prospects.
BUT!
When a sale goes through they make a BIG check, and this huge influx of money allows them to budget and spend from funds available.
The boom/bust (real estate agent) model will have times when the market is hot and they will make bank, then there will be lean years when they need to lean on their earnings to get through the tough times.
The McDonald's owner will have some ups and downs too, but they will be buffered by the order flow, and the odds are super low that they will have to reach into savings to survive a downturn.
This steady state model will never get hot and make you rich overnight the way the boom/bust model will, but it CAN make you rich exponentially as you make profits and invest them in new locations over time.
See where I am going here?
In my experience as a trader and mentor, the steady state style is better for compounding, bootstrapping and is easier for a newbie to learn, execute and gain confidence with...
If you have $500, it is totally possible to turn that into a 6 figure income in 2-3 years...
We have one apprentice who did this in 1 year.
One of the exciting breakthroughs that our proprietary 3D Apex Predictive Failure Technology® offers, is the ability to have the best of BOTH worlds!
By applying a Predictive Analysis Layer™ (P.A.L.) on top of your current investment strategy, you can identify many investment losses BEFORE you enter and get stuck.
This loss avoidance methodology skews the normal statistical distribution that the bell curve illustrates, and can deliver both high win rates AND large reward to risk levels!
Just like most human endeavors, most market participants don’t realize that peak performance lies in both of the “fat tails” of the behavior/skill/strategy bell curve.
They go for the median, the vanilla, the “safe”, the conservative, the “normal”...
And...
Eat the bitter bulge there in the middle, get frustrated by their anemic, vanilla performance levels, then quit!.
So get out there on the bleeding edges and get away from the mean (Mediocrity)...
Move to the extremes, (Peak performance) and watch your compounding efforts rise up on steroids!