Hi all. OK, I'll take another stab at the square root rule and hope to learn more from the further comments of jcl and others.

As I understand it, the 2 critical things to understand are:

- Initial Capital: The wealth that was originally invested, not whatever it's grown to. Not trading system stops & restarts. Not changing the trading system. Not closing the account and opening another with the same funds. Etc. None of these things change the Initial Capital.

- Trading Time: Drawdown risk and magnitude grow as trading time accumulates. Account Balance is used as a convenient proxy for this in the square root formula.

In the simple case of a single trader trading in 1 account, just apply the formula. Don't try to get around it.

The more interesting cases involve more traders, etc.:

1) Person A gifts the $1200 to Person C. Does Person C trade using $1000 or $1200 as their square root rule starting point? I.e., does the square root rule tie to the Initial Capital traded ($1000) or to the person who's never traded before ($1200)?

2) Person B may never have traded before, but has the $1200 gift come from trading? If so, same question: What's the starting point?!

3) Person B's aunt traded to get the $1200. But she stopped trading decades ago and the $1200 came to Person B as an inheritance. Has so much time now passed that Person B can safely use the full $1200 as the square root rule's Initial Capital?

4) Or, what if Person B doesn't know the source of the $1200? What should Person B then use as Initial Capital?!

Look forward to comments.

Thanks.