Let's say you are playing a game where you have a 999/1000 chance of winning $1 and a 1/1000 chance of losing $10 000. Would you play this game? A small thread on why you should never add to losing positions ✍️ [img:gif--rUcph3N7]

It's a human tendency to base decisions on “what is likely to happen”, but playing this game can be a costly mistake Though you will likely win $1, the disproportionately large loss you incur every thousandth time means that the expected outcome of each round is a loss of $9.

This is why you never add to losing positions 9 times out of 10 you will win big, but that one loss will wipe your account Essentially, just by “DCA-ing”, you are in fact losing money, statistically speaking.

The opposite, perhaps less gratifying but more enduring trading strategy is betting on rare, unlikely events with a big payoff should they occur Although a market crash might be unlikely, it can still be worth betting on it if the possible reward in such an event is large enough