The Leverage Space Model 301
FIGURE 9.4 Two-to-one coin toss—10 plays
Notice, that as the number of plays increases, the peak gets higher and
higher, and the difference between the peak and any other point on the
landscape gets greater and greater (see Figures 9.3, 9.4, and 9.5). Thus, as
more plays elapse, the difference between being at the peak and any other
point increases. This is true regardless of how many markets or systems we
are trading, even if we are trading only one.
To miss the peak is to pay a steep price. Recall in the simple single-coin-
toss game the consequences of missing the peak. These consequences are
no less when multiple simultaneous plays are involved. In fact, when you
miss the peak in then+1-dimensional landscape, you will go broke faster
than you would in the single game!
Whether or not we acknowledge these concepts, it does not affect the
fact thatthey are at work on us.Remember, we can assign anfvalue to
any trader in any market with any method at any time. If we are trading a
single market system and we miss the peak of thefcurve for that market
system, we might, if we are lucky, make a fraction of the profits we should
have made, while we will very likely endure greater drawdowns than we
should have. If we are unlucky, we will go broke with certaintyeven with
an extremely profitable system!