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The Magic of Compounding

  • #61
  • Oct 19, 2010 10:06am Oct 19, 2010 10:06am
Actually there is some false asumption here : Mighty is stating he is doing 2 to 5% daily, he is not telling us he is trading with what he earned previously.

If you want to live from your trading, you have to bank your profit from times to times. Not to mention a strategy may be winning one with a small account and losing one with too much money.

To become the billion man you are dealing with, you have to keep your money for ages assuming you are never losing, which is by nature against money management basic rules.
  • #62
  • Oct 19, 2010 11:44am Oct 19, 2010 11:44am
Quoting johnedoe
Acutally with Oanda you can........you just set up the trading preferances to the percentage you want and your positions automatically compound, also Oanda's position size is in units instead of lots, so you have total flexability in trade size...
Yep, that's what I like most about Oanda. No other broker offers that kind of flexibility and equality for retail traders regardless of account size.
  • #63
  • Oct 19, 2010 11:53am Oct 19, 2010 11:53am
Quoting MightyII
But ok, maybe I will post some proofs in the coming monthes to show what is possible in the forex.
I have one question for you:

Why?

Trying to "prove" your success to others is a waste of time, it won't gain you anything except maybe an ego boost, which, if you truly are that successful, you don't really need.

People will always have self-imposed limitations. Besides, this is a zero sum game. If you have an edge in the market (be it in the form of a new working system/algorithm, or whatever), it is in your best financial interest that the majority of others continue to have no such edge. I'm sorry but that's just the reality of this game.

Secrecy is one of the keys to success.
  • #64
  • Oct 19, 2010 1:20pm Oct 19, 2010 1:20pm
I've recently heard ...2000 in a micro account in my opinion is do-able but 4-5000 would be better.

(account equity x risk %) / $ value of stop loss = position size (n° of lots)


I've made a chart incrementing all of the factors pertaining to leverage ...From 100.00 to 5,000.00, in terms of 40, 60, 80 and 100 pips each. It looks like this:

60 pips
Account Size = $1000
Percent Risk = 1%
Amount Risked = $1000 * .01 = $10
Stop size = 60 pips
Pip value = .01 (1 cent(s) on a nano account)
Total pip value = 60 pip stop * .01 = $.60
Position size = $10/.60 = 16.66 nano lots (round down to 16)
Resultant pip value = .17 (17 cents per pip)
Resultant leverage = $1667 position size / $1000 account size = 1.67

I also used this Money Management Calculator to aid in the project.

My main concern is daily average pip swings in any given pair. I am looking at the AUS USD or AUS JPY, but the song remains the same. In deciding how to whether 60 - 80 pip swings short/long, what other factors besides comfort come into play in having a 5000 micro/nano account over a 1000 or 2000? I see that the pip amounts repeat at different levels, but is it primarily a comfort level or why is 5000 a magic number?
  • #65
  • Oct 19, 2010 3:45pm Oct 19, 2010 3:45pm
Hi TopGun, it's actually possible to have consistent profit everyday for extended period of time. i have actually do carry trading(compounding) for up to 6 months with returns of 0.2% per day until the recession come and margin called my account.

yes it's only 0.2% compared to the 2%. what i trying to say is it is achieveable and the next question we should be asking is how long can this system works?

If there are people out there trading fulltime for a living, that means they have an avg of consistenly profit per month. so it is doable..

1 thing i had notice is that people who had found the "holy grail" will not come here to share their system. Instead, they give encouragement words and some advice/tips on how to improve the trading(more on psychology) to get back the confidence newbie had lost when busting their account.

Compounding is the key to the riches..
  • #66
  • Jan 21, 2011 1:21am Jan 21, 2011 1:21am
How to teach you not to take profit from you account! Because you want a new convertible and holidays on Caribbeans! And you have money on your account for all this!
  • #67
  • Jan 22, 2011 7:03pm Jan 22, 2011 7:03pm
Quoting loush
Keep going guys you almost have it. Consitancy, stops with space, multiple positions,compounding gains, certain losses, and randomness, are all apart of the grail your seeking. Your on the right path. If you find it, do us all a favour and DO NOT POST IT.

Let those who discover it reap the rewards. And for gods sake if you make a fortune give half of it back to something worthwhile.
this is the best, most honest post i ever seen here.
this pig cannot be slaughtered for ever... or can it?
  • #68
  • Nov 19, 2011 10:14am Nov 19, 2011 10:14am
Inserted Video
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #69
  • Dec 5, 2011 4:07pm Dec 5, 2011 4:07pm
www.youtube.com/watch?v=F-QA2rkpBSY
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #70
  • Dec 6, 2011 5:41am Dec 6, 2011 5:41am
In my humble opinion, only when in our living where "in" things and "out" things are always in a constant ratio, the magic of compounding would work just magically.
  • #71
  • Dec 10, 2011 3:22am Dec 10, 2011 3:22am
Quoting FX Articles
...

This is where I introduce you to the cousin of the Magic of Compounding, which is called the Rule of 72. With the Rule of 72 you can calculate how long it will take you to double your money at any given rate of return. OK? Let’s take an example. If you're earning 12% on your money and you want to know how long it will take to double it (we're compounding, remember?) divide 72 by 12, and your answer is 6. It will take 6 years to double your money. Let’s do another one. If you're getting 6% on your money, divide 72 by 6 and you'll see that it...
As I'm sure you know, the Rule of 72 is just an approximation. It works pretty well for typically sized return rates, but it can overestimate.


The true way to calculate how long it takes to double your money at a given rate of return is this:

time to double = log(2)/log(1 + r)

...where 'r' is the rate of return (in percent). Also, it doesn't matter what kind of log you use, as long as you use the same type for both logs.

For the Warren Buffet example, if he makes 22% per year, then it takes him:

log(2)/log(1.22) = 3.486 years, a little longer than the rule of 72 estimate.
  • #72
  • Jan 4, 2014 4:58pm Jan 4, 2014 4:58pm
Quoting FX Articles
Have you ever wondered how Warren Buffet made his millions? In this article we look at the concept of compounding. Some of you know about this, some of you don't. Either way I'm going to give you the basics of compounding, plus a couple of new slants on the concept. I suggest you read The Magic of Compounding not just once, but several times. If you have children, print this write-up and give it to them to read. If they master this concept they will become rich. The Basics Compounding describes how numbers, or money, can grow. Numbers can grow in...

Thanks for the idea but your actually wrong.;-) He makes $5,000,000 on the last day but you have to add what he made the previous days and that = $10,000,000.
  • #73
  • Sep 5, 2015 12:10am Sep 5, 2015 12:10am
hmmmm
  • #74
  • Sep 5, 2015 12:28am Sep 5, 2015 12:28am
Buffett never traded forex.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #75
  • Edited Nov 25, 2017 12:36am Nov 24, 2017 11:57pm | Edited Nov 25, 2017 12:36am
Quoting MightyII
First, the reason of not answering is just that I didn't come to the forum since this time. When finally, I saw what was written, I answered. And I won't participate much on the forum in the coming times. But ok, maybe I will post some proofs in the coming monthes to show what is possible in the forex. And finally, Topgun, I won't ask you to apologize for anything.
Okay, it is now essentially 8 years later since MightyII made the claim that he was making "2% - 5% per day". He said he would show some proof "in the coming months" (in the coming months after he made his post 8 years ago). So, where is the proof? He has had plenty of time. He should be a multi-billionaire by now. Or, at least easily a multi-millionaire. Yet, he has disappeared like a ghost, never to be seen again.

I will again repeat what I wrote in post #51 of this thread: Come on people, don't come here and make outrageous lies. Claims such as "I make between 2% and 5% daily" doesn't exactly help the integrity of this forum - or any other forum for that matter.

Topgun
"Success is not a fantasy, it's a formula." - MTI
  • #76
  • Last Post: Mar 15, 2019 12:57pm Mar 15, 2019 12:57pm
Which broker allows us to withdraw 1 Million USD
Failure is not failure if you learn from it...
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