Compounding

[John Wimberley]

The truly wonderful thing about what we do is that once we complete a trade we have our profits immediately. This allows us to compound.

Compounding is an absolutely wonderful thing . It can take a small account and grow it to enormous proportions, and I think that this is why trading is the last frontier of capitalism.

I have attached a small excel worksheet that demonstrates this power. Please feel free to download it and alter it any way you want.

Instructions.
input the date, amount, and your average daily rate of return, then stand back.

The program is basic, and doesn't allow for withdrawals or deposits, but as I said, feel free to change it as you want.

[jasonshurnas]

what do you think is a fair average daily amount of return?
what is realiastic?


.5%
1%
2%!!!!

just curious


thanks

[Den]

Hi Jason,

That was always a question of mine, not just to other traders but to myself. Ive read so many different aspects to this subject, risk tolerance how many losing trades before you are cleaned out etc etc.

I have kept it basic to suit me. I am not academic. Once I understood AIMS ( after blowing several micro accounts in the learning process which I considered part of my expenses for education) and became confident, I used 5% and soon doubled my account however it was only a small account but real money. It was a goal, reckless or not.

If you have say 100k and then go for 2% a week that is 2k a week obviously. If you risk 1/2 % per trade and double your SL to tp you get 1%.

There are so many combos and everyone has different ideas, risk tolerance and some of our members have jobs and trading is part time blah blah.

My plan is to Compound and derive an income as I cant work.

I hope others answer your question too as there are top traders on this forum who really know their stuff and I want to see how they use money management etc.

All the best Dennis