In order to make 10 times your money, sometimes you do have to risk 27% - 48% of your capital. Why? Because that is just what it takes to make a massive return on your capital. If you risk 50% to make 10 times your money, that is a 20:1 winning trade.
Look at the times when AMZN fell to roughly 2 times sales and had you purchased back in 2005-2006 in the 30's, you would have faced some deep drawdowns in the value of your shares, to the tune of 27% right off the bat and then several other large drawdowns along the way. But, in the end, that is the way that long term, huge gains are made in the stock market.
Note too that when AMZN gets up to near 3 times sales (PSR of 3) that sellers come out of the woodwork and slows down the price appreciation until the valuation can catch up.
I hope this is instructive for any of you who are interested in learning how to invest in the stock market. If you believe that you need to cut your losses at 7%, then you will find it very difficult to hold onto a 10X winner like this one, ever.
Cheers,
Tim
Look at the times when AMZN fell to roughly 2 times sales and had you purchased back in 2005-2006 in the 30's, you would have faced some deep drawdowns in the value of your shares, to the tune of 27% right off the bat and then several other large drawdowns along the way. But, in the end, that is the way that long term, huge gains are made in the stock market.
Note too that when AMZN gets up to near 3 times sales (PSR of 3) that sellers come out of the woodwork and slows down the price appreciation until the valuation can catch up.
I hope this is instructive for any of you who are interested in learning how to invest in the stock market. If you believe that you need to cut your losses at 7%, then you will find it very difficult to hold onto a 10X winner like this one, ever.
Cheers,
Tim
Subscribe to my indicator package KEY HIDDEN LEVELS $10/mo or $100/year and join me in the trading room KEY HIDDEN LEVELS here at TradingView.com