Originally Posted By: DdlV

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Similarly, let's take a closer look at the 2 $500 accounts that each now have a balance of $650 - the 1st after 9 years and the 2nd after 1 year. If there is some greater probability of larger drawdown that grows with the duration of trading, then I don't understand why I can take the same $80 out of each account. Since they've been trading for different lengths of time, their probabilities must be different, right? And so I can either take more out of the 1 year account or have to take less out of the 9 year account?

Thanks.


I guess that the answer is purely mathematical. Somewhere in the discovery process of the square root rule the time variable have been eliminated. Too much time is passed from university, but it seams realistic to me. The objective of the research that brought out the square root was to find the optimal re-investing rule for a long term profitable investment, so the scientist was looking for a time independent rule.

my 2 cents