Compounding In Trading - One Of The Greatest Forces To Multiply Your Portfolio

Compounding: one of the greatest forces in the Universe - according to Albert Einstein.

It is basically we invest 1000 get 10%... we get 1100 ($100 profit)... next time we invest $1100 and get the same 10%... but now profit is $110.

This you will notice is smartly incorporated in our portfolio management in the Ten Trades Challenge program, and many other methods. Consider this ten trade challenge your fast-track course into pro trading.

This of course works only for winning traders who have an edge and more wins than loses.

Imagine you have 7 accurate 10% trades, and for ease of math, when stopped it's 10% loss...

Watch this...

1 becomes 1.1

1.1 becomes 1.21

1.21 becomes 1.331

Then we lose 10% it becomes 
1.1979

+ 10% = 1.31769
+ 10% = 1.4494
+ 10% = 1.5944

we lose two

1.29 + 10% = 1.42

42% gain to your overall portfolio...

 

Now compare it without compounding...

same trades...

0.1 + 0.1 - 0.1 + 0.1 + 0.1 + 0.1 -0.1 - 0.1 + 0.1 + 0.1

40% gain.

Now this may not seem as much difference, but it is like a magnifying glass... the bigger the winning streak the bigger the exponential growth - thus increasing, magnifying your trading edge.

All you need to benefit from this free money is know your edge. If you are above 50-50 trader, you can benefit from it on the long run.

When losing (under your starting portfolio), don't be compounding :) Ensure you do have an edge.

Cheers!


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