What is compounding, and how can I apply it to scalping strategy?

I have read about compounding used with scalping.

Can someone please explain a compounding strategy to me.

for example, you have a $1000 account.
you trade at $0.1/pip

after some time you reach $2000
you then trade at $0.2

and so on

anyway that's my idea of compounding

Compounding is nothing more than reinvesting your gains in future trades.
->exponential growth.

Better illustrated with an eg.

acct balance $1000
Leveage to be used 20x
Trade size 20,000 (ie 2 mini = $2/pip)

Profit on day 1 = 30pips = $60

New acct balance = $1060
New trade size = 20x $1060 = 21200 ie $2.12/pip

And so on and so on....

Hope that makes sense.

Another way to see the effect of compounding is to make a very simple excel sheet.


Regards,
K.