All you need to know about making money trading

Ed Seykota is arguably the greatest trader alive.  I couldn't resist posting his formula for making money trading:

http://www.youtube.com/watch?v=O0yZG6eoahU

After that, Google for him.

3% is all you need to get filthy rich!

I do a great deal of reading and research.  I have recently been reading Michael Covel's, "The Little Book of Trading", and the following really struck home:

"Above average returns really start with compounding.

You want to know the difference between being rich and poor..?  Three percentage points - that's it.  If you take a 12 percent annual return compounded monthly over the course of 30 years, basically the working career of the average person, every dollar* that you invested will be worth $35.94.

If you compound a 15 percent annual return compounded monthly over 30 years, can you take a guess of the return difference?  Is it 10 percent better or 50 percent?  No.  Every dollar invested would be worth $87.54 a difference of 143 percent...

It is only three percentage points, but over 30 years that makes a tremendous difference.  That is why you have to shoot for the higher return.  Even if it is two percentage points more - it is a huge difference."

 * Or pound, or euro, or..!

The message from the book is:

• Construct your strategy, but basically have a "winners stay, losers go" core.
• Make sure it is built around the one and only thing you have control of; your risk.
• Back test it to breaking point to build your confidence in it.
• When tested, follow it without deviation.