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Is compounding necessary?

BellaVista507
Feb 24 2013 at 16:31
게시물251
Ironman posted:
BellaVista507 posted:
websmith posted:
If you want to get significant result, yes compounding is necessary.


 I havr not compounded and was able to earn 100% this past week.


Of course, but after a few weeks, months like that you will compound and increase your stakes?
No?


 Well honestly no. I mean its very easy to get tempted to. I have seen many good traders blow accounts due to compounding. Only to make back all the losses about 2 weeks later. Which of course would of resulted in more profit if he/she did not increase their risk. The temptation is there, yet one wrong move, and its all over. Only for you to have to start all over again.
 A person who is starting with maybe 50 usd can try compounding. Yet, there comes a point in which you must decrease your risk.

Ironman
Feb 24 2013 at 16:39
게시물70
Well, then you must have started with a big enough BR from the beginning.
I assume that your non-compounding is very closely linked to the fact that you Martingale... Keeping it safe.

For non-martingale strategies, compounding is a good thing.

Let's say you start with a BR of £1000.
Every trade your risk/reward is £20.
(Now, this of course assumes that you have a winning system, otherwise you're fracked either way.)

When your BR reaches £1500, you increase your risk to £30. Should it go to $1400, you go back to £20. And so on...

And every time your BR increases 50%, you increase your R:R 50%.
That's just sound compounding.

Of course, this is only sound if you don't scalp, and have a RiskRewardRatio of 1:1.


BellaVista507
Feb 24 2013 at 16:41
게시물251
Your correct Ironman. I'm not compounding because I'm using Martingale. There are times in which I want to compound, but if I fall into an accumulation zone. It will cause me to bias towards to the positions which I'm in.

kasravi (kasravi)
Feb 24 2013 at 20:46
게시물25
BellaVista507 posted:
websmith posted:
If you want to get significant result, yes compounding is necessary.


 I havr not compounded and was able to earn 100% this past week.


May I ask what do you understand under compounding?

Cheers.

Not giving a quarter away.
BellaVista507
Feb 24 2013 at 22:07
게시물251
kasravi posted:
BellaVista507 posted:
websmith posted:
If you want to get significant result, yes compounding is necessary.


 I havr not compounded and was able to earn 100% this past week.


May I ask what do you understand under compounding?

Cheers.


 Compounding is the form of wagering in which you reinvest your profit. It isn't simply using a larger lot size.Say for an example you depsoit 1k into an account. At which point on the first trade you turn a 100% profit. On your second wager your lot size is now larger then what it could of been before the first trade. You dont have to invest 100% of the profit. Yet with compounding your not protecting your profit.

BellaVista507
Feb 24 2013 at 22:53
게시물251
Bishop. Look at the accuracy of this position which I have open right now. Its only 1 dollar per pip. Yet, I have not been in red more then the spread since the start of the position.

첨부 파일:


BellaVista507
Feb 24 2013 at 23:14
게시물251
Price went as low as 124.12 before hitting the stop loss of 10. :)

bennyblanco4X
Feb 25 2013 at 04:41
게시물10
Someone said that if you are in a PAMM account then you are not compounding. How does that make sense?

My basic understanding is that if you start with $5000 in a PAMM then after 1 month you have $5500 then your lot sizing will reflect that and your trades will be larger due to a higher % lot sizing.

If someone can refute this or confirm this then I'd love to know as I frankly do not believe or understand whoever said it about 10 posts ago. Surely leaving money in a PAMM account (that is increasing) is pure compounding.

kasravi (kasravi)
Feb 25 2013 at 07:21
게시물25
Ok, I understand that's plausible. However compounding or not compounding once you lose you have not protected your profits anyway.
I understand what you mean is once you profit in a trade and on your second trade you go with a heavier load you expose yourself to a far much bigger lose. If that is the case than instead of making it a routine the trader is better off only compounding or risking more once the setup is a holy grail to him\her.The methodology in that sense stays the same, in my humble opinion.

Cheers.

Not giving a quarter away.
NickMcDonald (NickMcDonald)
Feb 25 2013 at 07:27
게시물86
If you want to change your financial destiny trading forex then I believe you MUST use the power of compounding.

Find your passion and work hard
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