How to Turn a 40% Year Into a 2,000% Year

Posted July 23, 2025

We just saw a huge winner in RKLB out of an ideal high tight breakout last week. The stock met all the rules in our new rapid account growth course pre-market the day it broke out.

The stock triggered the parabolic exit strategy for around a 30% profit on the final shares in just a few trading days for those using the course rules. It made this move while holding a tight stop-loss which is paramount when trading. Once you let a stock go 15%, 25%, 30% or more against you, the long-term prognosis for your trading account is poor.

This week we will be discussing how to magnify your profits when swing trading using the most bullish technical patterns (where we can get a low risk entry with a high win rate and a higher percentage of big winners).

It really does come down to math and how much risk you are willing to take.

The Conservative Approach to Establishing Your Per Trade Risk When Swing Trading

One approach is to have very low risk per trade using these strategies.

Lets say you take a .25% to .5% account risk per trade when swing trading top earnings breakouts and ideal high tight flag breakouts. Our strategies for these bullish patterns in many cases use a 3.5% to 4% stop-loss.

A .4% account risk would translate into around a 10% position size per trade using our strategy to trade just the most ideal high tight flag breakouts. Meaning, 10% of the account would be put into each trade.

If we average 7.5% per trade (averaging winners and losers) using the optimized exit strategy, this would result in around .75% average account growth per trade (10% of the 7.5% profit since we are using 10% of the account per trade). This assumes we see the same win rate and average profit seen in the first back-test.

In about 45 trades in a year, this would yield around 40% total account growth. This assumes you always use 10% of the account per trade no matter what the size of the account is at the time. So we turn over our edge or compound, in other words.

The YOLO Approach to Swing Trading

Now lets say you instead use a YOLO (You Only Live Once) approach to using these strategies when setting your account risk per trade.

Lets say you are a big risk taker and want to take 4% account risk per trade. Or, you just want to start with a much smaller amount and get very aggressive with that amount only with good market conditions (so starting much smaller and keeping the majority in cash which is a much better approach).

Since the stop we use is often 4% on the most bullish technical setup, the average account growth per trade becomes around 7.5% if we see the same win rate and average profit per trade.

The average time in the trade is about 3.5 days. So its very possible to do 45 of these trades in 1 to 2 years.

Using a compound interest calculator, you would see that this would yield around a 2,000% total return over the 45 trades.

How Not to Turn a 40% Year into 2,000%

So just by raising our account risk from .4% per trade to 4% per trade, the results skyrocketed. 40% became 2,000%. 2,000% multiplies your account by 21.

Same strategy, same entry and exit point, and same type of instrument we are trading.

Now the risk is that the win rate could collapse on us although we continue to see big winners like RKLB last week. These huge winners within a few days skews the average profit per trade in our favor.

Using the YOLO approach its possible to turn 10k into a million in about 70 trades. Each trade averages about 3.5 days.

We see about 1 ideal high tight flag breakout per week. So we will be in cash a good portion of the year waiting for the next ideal trade.

Unfortunately, what many newer traders will do is use options instead of the underlying stock. The problem with this is that the options are often a lot less liquid making it difficult if a trade goes against us. When the price of the stock hits the stop, it can be tough to sell the option at a fair price.

Also, the option price goes lower over time if the price of the stock goes sideways. In fact, the stock could move a little higher over a week or two while the option loses value. Add in a degradation of the win rate, and we are in danger of taking our average profit and turning it into an average loss.

If we use margin, we could take a huge loss if the stock gaps lower for some reason.

The Big Advantage to Trading Ideal Earnings Breakouts and Ideal High Tight Flags

Again, the average time in our ideal high tight flag breakout is around 3.5 days or less. If we just go for the first profit target, the average time in the trade is about 1.5 days. This means you are either in an ideal trade with explosive upside and a high win rate. Or, you are sitting in cash. This lowers drawdown.

It gets more complicated when we add other strategies. And this is where the danger lies.

Often, losing trades will cluster around the same time period. If you are trading several strategies at once (we have not see one that compares with an ideal high tight flag breakout), those losses in multiple strategies could all cluster around the same few week period.

Ideal high tight flag breakouts only come up about once per week. So while other traders are flailing away and losing on multiple trades, one after another, you will only be in an ideal trade that week. Or, in cash.

This is why sticking to one or two ideal strategies has a big advantage. First of all, you can become an expert at the one strategy if you focus more on it. Second of all, you are not spreading risk over lower win rate strategies that just come up too often.

Lowering Drawdowns

A lot of traders will have multiple position trades, an etf, gold and perhaps a market index at any given time. And add some other bottoming pattern on a beaten down stock on top of that.

The problem is they can all go down at once.

And this will very likely increase your drawdown. It could make the drawdown much larger, in fact.

A lot of traders will try to diversify among different trades in their trading account to balance the other trade. So, in other words, if stock A goes down then stock B has a good chance of going higher.

This is great for investing, as long as all the stocks are terrific investments. Its also great for trading – as long as they are all A+ opportunities. A safe money market can be the perfect diversification to reduce risk.

But diversification can quickly become deworseification if we start adding trades to diversify even though the swing trading opportunity is not all that great. For rapid account growth, dare I say, we need more concentration. But only in A+ opportunities during market conditions that are good enough.

In my experience, its tough to go wrong with the A+ high tight flag breakouts and A+ earnings breakouts. In fact, high tight flag breakouts are often what is making the most profits for us.

In Summary

So position sizing is a critical consideration when swing trading. We saw in the example above how it can make the difference between a 40% year and a 2,000% per year. Or, a 40% year and maybe a 150% per year if the win rate and average profit falls.

The great thing about the more conservative approach is that it automatically reduces drawdowns. All else being equal.

Of course, picking the ideal trades is a critical step also. Most ideal high tight flag breakouts come up pre-market. And the course can show you how to build a great watch list of high tight flags and how to check each morning for a big earnings breakout brewing where we can nail a low risk entry point with plenty of upside potential.

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