Hi

I have read about the square root rule in the Black Book and also in the forum. It makes good sense to me to protect the account from future unknown draw downs with this rule. There is one thing that confuses me a bit. I'm not an expert in statistics so please bear with me:

Let's say I'm trading a Z-system and I want to reinvest all the profits. My starting account is $1000 and I make $200 in profit. According to the square root rule I cannot reinvest the whole $200. I have to reinvest less. Fair enough.

If I stopped trading the system then that would give me $1000 + $200 = $1200 in total in my account. What if I then started trading the same Z-system right away. Then my starting amount would be $1200 meaning I have suddenly reinvested the whole $200 in profits. What am I missing here?

Thanks!

Regards