In this episode, we will discuss "sequence of returns". The sequence of returns matters in trading due to its influence on the concept of compounding. When investment returns compound, meaning that previous returns generate additional returns, the timing of those returns becomes crucial. If positive returns occur early in the investment period, they have a longer time to compound and grow. However, if negative returns occur early on, they can have a disproportionate impact on the overall portfolio value. Tune in now and gain a deeper understanding of the sequence of returns in trading.