[Good news] The less-capitalized traders actually have a higher win rate

Hello, this is Koyama.



“If you start with little capital,

you won’t really make much from stocks, will you?”



In cases like this, I often receive consultations about capital.

Indeed, stock trading is advantageous for those with more capital.



It goes without saying that, if you earn 20% annual interest,

the amount of profit differs greatly



In addition, the more capital you have,

between 10 million and 1 million yen in capital.





the more trading options you have,

and when the market moves against you,

the more you can withstand the downturn.



There is no doubt that capital power matters in this world.





But, to be clear, I will say straight out

that having little capital is nothing but an excuse.



First of all, there are very few people

who start stocks with rock-solid capital.



Many people start with barely enough funds

yet still manage to make significant profits.





I myself lived as a part-timer in my 20s, so I certainly didn’t have surplus funds.





Nevertheless, from there

I first earned a 10 million yen profit,

and now I live in a Tokyo tower residence without any inconvenience.





Please don’t use lack of funds as an excuse.



At minimum, if you have funds enough to start trading,

there is a way to increase your capital.



Of course, I won’t say

“your capital will grow instantly.”

But

thinking that “I can’t do anything because I have little money”

and withdrawing from stock trading would be a waste.



“But realistically, you know…,”

many stock traders who can’t accept the current talk

still exist, right?



For such people, there is one story I’d like to introduce.



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“The Poor” and the “Rich”

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Have you heard of the game

“Angry Birds”?

It is a globally mega-hit game.



Based on that game,

a game called

“Angry Blueberries”



In simple terms, it is a game where you hit blueberries with waffles.



Using this game, an experiment was conducted.

Subjects were gathered to play 20 rounds.



Subjects were divided into two groups.



“The Poor”



For the poor subjects, they were given

3 blueberries per round,



for the rich subjects, they were given

6 blueberries per round.

Thus the rich group received double the blueberries.





Now, how did each group perform?



Common sense would say

the rich subjects who receive 6 blueberries per round

would be overwhelmingly advantaged.



Since they have more to play with, they can play more.





However…



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Obviously, rich subjects had many blueberries and scored many points,

but from another perspective,



the poor subjects performed better overall.

Their shooting accuracy was higher.

It wasn’t because their vision suddenly improved.

The poor people took longer per shot (no time limit).

And they aimed carefully.

Since they had fewer chances to shoot, they were more cautious.

By contrast, the rich people just fired blueberries.



And though they had more chances, it wasn’t that they grew bored

or wanted to finish the task quickly.



From the very first shot, the poor subjects showed greater focus and caution.






Sundar Mullinathan
Elder Shafir
'Misers Always Short of Time: Behavioral Economics of Deprivation' (Hayakawa Publishing)
February 25, 2015, First edition
P.39


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With more chances, the rich subjects could accumulate points more steadily,

but in terms of “accuracy,”





the poor subjects performed better,according to the results.



The rich subjects

felt, “There are six, so I’ll do it roughly.”

Whereas the poor subjects



thought, “There are only three, so I must be careful.”

Thus, the poor subjectsshowed dramatically higher concentration.



The Poor were significantly more focused.





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Having less capital often leads to higher success rates

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And this story,

can be applied directly to investing, don’t you think?



When comparing traders with abundant funds to those with little funds,



the more capital you have, the more your caution in a single trade tends to decrease.





“Well, with this much capital, losing a bit isn’t a big deal,”



you might think and place entries carelessly.



On the other hand, with little capital, for example,

“If I lose this time, I’ll lose my margin and won’t be able to trade,”

that kind of tension starts,

and you become less likely to enter recklessly.



If you enter cautiously,

that alone doesn’t guarantee you’ll win, but

the more cautious you are, the less you tend to lose.





Furthermore, compared with traders with a lot of capital,



those with less capital tend to have higher win rates.



So, if you’re worried about insufficient funds,

why not rethink your approach?





Lack of funds is not all bad.



It can gift you a great weapon called “focus and caution.”





There’s no reason not to make the most of this advantage.



Precisely because you have no money, you can aim for a reversal with a strategic approach,

and there are surely people who have blown their capital chasing big plays,



but please view that as a valuable experience and learn from it,







and rise again with a refreshed mindset.



Well then, please enjoy the rest of today as well.

Thank you for watching until the end.



Keizo Shimozuma