Declare what the fraction applies to
A fraction can be defined relative to the current model balance or the initial balance. Those definitions are not interchangeable. Preserve the order, base and unit of every supplied step rather than using a label such as risk percent without its denominator.
The example uses large invented decrements to make the arithmetic differences visible. They are not recommended risk settings. Real executions, costs, gaps and cash flows are outside the closed model, so an entered fraction is not an authenticated maximum loss.
Apply the supplied fractions to the changing balance
Start at 1000 USD and apply successive teaching decrements of 10%,20% and 30% of the then-current amount. The path is 1000→900→720→504. Equivalently,1000×0.9×0.8×0.7 gives 504.
The arithmetic average of the three rates is 20%, but applying a fixed 20% decrement for three steps gives 512. That different model is not exactly the original path. Subtracting a fixed 200 USD on each step instead gives 400, which uses the initial-base amount rather than a current-balance fraction.
| Teaching model | Declared operation | Ending amount |
|---|---|---|
| Supplied variable fractions | 1000 × 0.9 × 0.8 × 0.7 | 504 USD |
| Fixed average fraction | 1000 × 0.8 × 0.8 × 0.8 | 512 USD |
| Fixed initial-base dollars | 1000 − 200 − 200 − 200 | 400 USD |
Do not repair the difference by changing the saved inputs
Each result follows from its own stated operation. If a review requires the original variable path, retain the individual fractions. If it deliberately explores a constant-fraction scenario, label that as a separate scenario instead of claiming it reconstructs the entered sequence.
Exact rational arithmetic can distinguish a model difference from an intermediate rounding issue. It does not establish that real losses will equal the entered fractions or that a strategy has been tested. No market observations are supplied by these numbers.
Keep missing steps and other movements visible
A missing step cannot simply be treated as a zero fraction. Likewise, a deposit or expense between two balances would require an additional movement under a different, explicitly stated model. Preserve such gaps rather than forcing the final balance to match an attractive scenario.
If an entered fraction is outside the model’s permitted range, report invalid input. A zero or negative resulting balance can also make a later percentage-recovery question undefined or economically different. This simple example does not model debt, liquidation or margin requirements.
Report the model, not an inevitable future path
A reproducible result contains the starting amount, step fractions, their changing bases and the ending model balance. Keep the fixed-average and fixed-dollar alternatives alongside their assumptions when comparing them.
The three fictional ending values are not forecasts, verified trading losses or a suitable-risk recommendation. The companion case adds a model audit to a loss-sequence calculator while leaving the main commentary page and any real account untouched.
The optional link below leads to this site's separate crypto signals and Telegram updates offer. The record method is usable without that offer. It does not independently verify the offer, establish country eligibility or turn the teaching example into an actual transaction.
Primary sources and scope
- Python documentation: rational numbers
Exact rational arithmetic supports independent reproduction of the fictional numerical examples; it is not a venue, accounting rule or strategy validation. Checked 2026-10-21.