The power of compounding forex

The power of compounding forex

10/23/ · The compounding strategy has some advantages and these are as follows: Compounding enables a trader to use a low-risk method to achieve high returns. It is a sustainable way of trading forex Whether or not you subscribe to such statement, it is without debate that compounding does offer phenomenal results in the investment world. With a systematic plan, you can parlay your profits from trading in the foreign exchange (FOREX) market to a substantial fortune. Here's the plan: Get A Dependable Strategy With the power of compounding gains figures like that eventually become realistic in the long term if you can remain consistently profitable at even 2 - 3% a week! So if you really want to be successful aim for 2% a week instead of 20%, compound your gains and begin building your future! Happy trading, Lee J Brown. blogger.com

The Power of Compounding

Many retail traders have a short term view of the financial markets, but do not pay much attention as to how they can profit from the market in the long term. One such strategy which enables traders to make a little capital go a long way in the FX market is by the use of the compounding principle, the power of compounding forex.

Albert Einstein called it the greatest mathematical discovery of all time. We are about to see why. Compound interest is a system where capital and its returns are re-invested using the same or lower amount of risk, in order to get a multiplied sum in future. At some point, the percentage returns the power of compounding forex remain the same, but the monetary value of the percentage returns increases with time.

That is how compounding in forex works. To demonstrate this, we will use an excel sheet into which a rate of return and a starting capital have been computed, and we shall see how this amount compounds itself over a period of one year and beyond.

The figures representing the capital and the rate of returns can be adjusted manually by the trader, and the formulae that have been input into the returns fields will be automatically adjusted, the power of compounding forex. Things will usually be quite slow in the 1 st year and this usually leads to discouragement on the part of many participants in a compounding challenge. But if the challenge is continued and the trader perseveres into the 3 rd year, that is when returns really start to get amazing.

A monthly return of All it requires is sticking to monthly targets with a lot of discipline. There are 20 trading days a month. But we will cut this down to 12 days a month, trading only on Tuesdays, Wednesdays and Thursdays, which are the days of maximum volatility and trading activity in the market. That is the power of compound interest and that is what traders who really want to profit from the market should aim for.

In actualizing the compounding strategy, a number of things must be considered and put in place by the trader. One of those factors is risk management. With new leverage requirements now imposed by the European Securities and Monetary Authority in Europe, brokers in the EU now require far more capital than ever before to be able to maintain positions.

Let us assume that the rate of return being targeted is So you would be aiming to make 52 pips on day 1. The cost of setting up a 0. So the trader has to step down the lot size. If you use a broker outside the EU, the generous leverage requirements will allow you to set higher lot sizes than would be possible with an EU broker. The compounding strategy has some advantages and these are the power of compounding forex follows:. The compounding strategy is worth trying. The best time was yesterday.

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Forex Compounding Strategy: How Does Compounding Work?

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Compounding Forex Profits For Success

Whether or not you subscribe to such statement, it is without debate that compounding does offer phenomenal results in the investment world. With a systematic plan, you can parlay your profits from trading in the foreign exchange (FOREX) market to a substantial fortune. Here's the plan: Get A Dependable Strategy 12/16/ · Principal is the amount of money you invest at the beginning of your journey. When you invest this money in a fund, after one year, you’ll earn a percentage in returns, adding to your bottom line. It’s not much at first, but it sets in motion the compounding process—a big enough deal that Einstein called it the eighth wonder of the world Compounding is extremely powerful and will skyrocket your account very fast. How would you like to turn $ into 1M in 4 years? If you can average 15% returns each month and you compound each and every month then you will achieve this type of return