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Compounding

Growing an accountOn year 1 you were accumulating knowledge & playing around. On year 2 you were building a strategy and tweaking it and making it work. Then on year n=3 you spend the first months applying your strat correctly, making sure it keeps working. You are still looking for what works best what works less well, but there are no more major tweaks, it does not change much from here. And after a few month you can start scaling up. So after 5 years you get to the point where you can make decent money, enough to live off and put some in your account to still grow it, and you have enough history to know you are rather consistent. You can continue like this, or I think it would also be possible to find a job doing this with those 3 years, provided there is no big drawdowns say the biggest is below 10%, and the variance is not absurd. I see some people, it seems even 5 years is too long for them. They would rather work as a slave for 40 years making no progress never having even a chance as getting rich, and then maybe retire after 40 years of 9-5. Probably not because the government is broke. But 5 years is way too much, got to day trade and get poor quick. To get 5R is not impossible, and it is not even needed to try hard to catch every move. A handful of good high probability trades in a month is all it takes. If I were making on average 7R per month I would be aiming for 5, better to have an average target that is a little under what is achievable, than too high and try forcing bad setups. With the 4 hour or above chart, there is time to look at a good dozen different assets (a couple of currencies + a couple of commodities) and not just "look" but follow what is going on. This means being able to pick the very best from each. And costs are cheaper than lower timeframes, and it is easier to let them run, and it is not necessary to be as precise. So starting with only 2000 currencies (200,000 Y) it is achievable to make decent returns of about 2000 $/£ a month after 5 years. Without risking more than 2% ever. Starting with 10k, those can be reached much faster so it is a good idea to start life by getting a job and saving up a little. And not blowing up all lifesavings on trying to get rich quick. High reward compared to risk is really ez pz I think, because you just lose all the time, so you get so used to it, you'll always think "oh well here goes another loss". Wins are happy surprises, and you do not need many happy mistakes to make your month/year. Even if it starts going green "just another loser doing some noise first". Once it goes green ALOT, more than say maybe halfway target then you start thinking "oh hey it might be one of those rare winners", and until then you were not worried of it being one of those rare occasions you actually win. Of course if you are this fool that will get all excited the second it goes his way and snatch away his tiny profit then you cannot even cross one of the easiest obstacles and the machine gun just mowed you down, you are dead lay down. 10R is pretty high, and to expect a smooth consistent growth is not realistic at all. So to get to that target of making decent returns, one has to be able to go through the drawdowns, the more boring periods too. Provided the drawdowns are just bad luck streaks, then in a couple of years zooming out they'll look like nothing. This is yet another obstacle where plenty will get stopped. But one day you'll be able to look back and say "I made it". You'll sort of look dumb because you'll still be in the middle of the obstacle course (it never ends), but you'll be a happy idiot 😊.
Education
by MrRenev
3
USDCAD 2HR SHORT IDEA!Here we have a short-term bullish trend coming to meet a weekly trendline. During its ascent, price formed multiple resistance levels that it eventually broke through. Now I am waiting for signs of rejection when it meets the long term trendline (zoom-out on a higher timeframe to identify it) to see opportunities for Short entries. This may be a bearish engulfing candle close at the large trendline, or a breakout and retest of the short-term rising trendline. I’m also using a tight SL to increase RR (No point using a large SL for this trade as if it reaches that far, the trade becomes invalid anyway.) If price continues to drop, I will remove some of my position at each support/resistance level that it meets during the descent to the daily support at the 1.3045 level.
Short
by Networth23
1 reason why institutional money will NEVER go big on PonziCoinWe compare a BTC baggy speculator to a largely diversified fund. We assume risk rewards are the same and on 1 side the BTC baggy takes 2 huge trades over a 2 year period, the diversified fund has 200 positions in total, in bacthes of 10 that are held approximately 10 weeks each. This is quite similar to reality. I also compare the 2 time BTC gambler to a speculator that takes 10 smaller trades instead of 2 huge one, and demonstrate that even this small difference makes a HUGE difference result wise (spoiler: he makes 75 times as much money). 45% to make 125% once/once 100* 0.45 to make 100*1.25 0.45*2.25 = 1,0125 (amazing) For the smart speculator the formula (0.9955^100)*(1.0125^100) is incorrect it assumed every trade is compounded. Let's look at a speculator that holds 10 position at once. Because (1+x)*(1-x) = 1 - x² < 1, and the bigger the loss the harder to comeback (lose 1% only need to make 1.01% - 1% more only to breakeven, lose 50% need to make double that (100% more) to breakeven), I'll affirm without going into too much details that: The best case scenario is in each batch of 10 trades the speculator wins 5 loses 5 The worst case scenario is the speculator loses all trades in 10 batches of 10 in a row & wins 10 of 10 in a row. Best case scenario, he makes 20 times 0.9775*1.0625=1,03859375 (0.45*5=2.25 and 1.25*5=6.25). Note how this is already more than the amazing Bitcoin total returns. 20 times this compounded is => 1,03859375^20 = 2,13. Worst case scenario 10 times 0.955 then 10 times 1.125 => 2,049. The diversified speculator doubled his money. The dumb moon chaser that got "the bull run of his life wow such big % best performing asset" broke even. I just want to bang my head on the wall when I hear "best performing asset". There was a guy on tv that said this. OF COURSE he also smiled like an idiot. OF COURSE he made no sense zero logic. OF COURSE he uttered the incredibly stupid sentence "If I knew how to predict the future I would not be here I would be at the beach". I can compare it to a third, that only takes 10 trades in total in 2 years. Risked 9% each time to make 25%. 0.91^5*1.25^5 = 1,9044. Almost doubled his money. Of course most Bitcoin dumb money is not risking 45% to make 125%, they are risking 100% to make "moon". I wonder what returns they believe can give them (all by the way) 100% back. Oh but of course "it will never happen". They will grow old holding their bags to zero and vanish into oblivion. And let us not forgot that idiotcoin does this: And let us not forget that idiotcoin price action shows INFERIOR setups to what we regularly see elsewhere. I assumed for this that baggycoin had as good risk rewards, but here we can see this is not the case. This is just 1 example but it is always like this... So things are actually even worse... Nice, wait months and months of flat price action for this crap? When there are much better opportunities based on the weekly chart too on a DAILY BASIS? "Uuuuh but price only went up 4% my retardcoin went up 8900%" - Mathematically illeterate simpleton that also has no clue about leverage (if he really wants a one time big number due to mathematical illiteracy). And since all crypto are correlated and alts are unpredictable, no self-respectable fund is going to go more than 1, maybe 2 percent, in crypto. Oh I said self-respectable, not that would be zero percent. I mean the crazy ones. If big money comes in (Soros) it is either small (Rothschilds that are trillionaires put 100k in emmm do BTC baggies know what percentage this is? They probably have more spare cash in their pockets), OR they are in to extract as much money from baggies as fast as they can (Soros broke the bank of england). There is ABSOLUTELY NO REASON for professionals that want to make money to go in BTC buy&baghodl. They can make more with less risk. They also know this is an unethical ponzi scheme and often have a reputation to protect. But I won't get started on other reasons they will not throw money at retail "believers". One day they will realize that the people pointing & laughing and calling them idiots were not just joking but meant it, and they were not 'just mad they missed out', and it will hurt hard. They are going to fall from so high. It will be like the 6th elements, they will realize they were the suckers all along. I preped my pop corn and I cannot wait. Going to be very amusing.
BITSTAMP:BTCUSDEducation
by MrRenev
5
How much can you make in 5 years? Money makes money . It's an age-old saying, probably because it's generally true. But starting out as a retail trader can be daunting and at times, frustrating. It takes time to build up a sizable account big enough to allow us to take the leap from trading part time, to full time trading. Something that has kept me motivated over the years is an excel spreadsheet a friend of mine made. It demonstrates how consistent monthly returns can lead from a small and humble account balance, to a huge one. Thanks to the compounding effect. Assuming you don't make any withdrawals, let's see where consistent, conservative trading over 5 years could get you. SCENARIO 1: SHRIMP Starting balance: $1,000 You've traded demo for a while, you've developed a winning formula, and you're ready to put your money where your mouth is. Monthly contributions: $100 A hundred bucks is all you can afford at the moment, after bills and overheads Monthly returns: 8% By being selective in your trades and risking between 1-2% per trade, your conservative approach has allowed you to be consistent so far Year 1: Month 3: $1,484.35 Month 6: $2,220.47 Month 9: $3,147.76 Month 12: $4,315.88 Year 2: Month 15: $5,787.38 Month 18: $7,641.04 Month 21: $9,976.13 Month 24: $12,917.66 Year 3: Month 27: $16,623.14 Month 30: $21,290.98 Month 33: $27,171.11 Month 36: $34,578.39 Year 4: Month 39: $43,909.42 Month 42: $55,663.83 Month 45: $70,471.01 Month 48: $89,123.79 Year 5: Month 51: $112,620.92 Month 54: $142,220.53 Month 57: $179,507.52 Month 60: $226,478.39 Behold! The humble $1000 has been transformed into more than 200k. That's just 4 winning trades a month at 2% per trade. SCENARIO 2: FISH Starting balance: $10,000 So you've got a good chunk of savings lying around and you're ready to get serious with your trading. Monthly contributions: $0 You've stumped up all of your available spare resources into your trading account and you want to enjoy spending any surplus money from your other income streams. Fair enough. Monthly returns: 8% By being selective in your trades and risking between 1-2% per trade, your conservative approach has allowed you to be consistent so far Year 1: Month 3: $12,597.12 Month 6: $15,868.74 Month 9: $19,990.05 Month 12: $25,181.70 Year 2: Month 15: $31,721.69 Month 18: $39,960.19 Month 21: $50,338.34 Month 24: $63,411.81 Year 3: Month 27: $79,880.61 Month 30: $100,626.57 Month 33: $126,760.50 Month 36: $159,681.72 Year 4: Month 39: $201,152.98 Month 42: $253,394.82 Month 45: $319,204.49 Month 48: $402,105.73 Year 5: Month 51: $506,537.42 Month 54: $638,091.26 Month 57: $803,811.22 Month 60: $1,012,570.64 Now it's unlikely that in this situation, you'll be trading pip sizes more than what would bank you 100k in 3 months, but the point is that you can trade conservatively and get to a point where you're earning enough to live like a king in just a few years. Happy trading everyone! Hope this has helped to motivate you and think about trading more conservatively to preserve your capital and think about your long term future. AvidTrader P.S. If anyone would like the real spreadsheet, PM me.
Education
by avidtrader89
3
Is FTR A Good Investment Candidate ??This is a WEEKLY chart of FTR. You are looking at about 7 years of history... FTR just recently bought some assets from Verizon. I would say the stock ran up on the purchase and now it is falling back to the uptrend line that started back in early 2014. Is FTR a good investment candidate at this point in time? Let's look at the best part of the chart first. Yes, it is the downtrend line. A SEVEN year downtrend line! If you are going to consider FTR a good investment candidate it can' t be in a downtrend. I would comfortably say the downtrend is over. I could be wrong but I will feel pretty comfortable as long as the price stays above uptrend line #1. What is the next thing I like about this chart? I like that there are 3 uptrend lines I was able to draw. Each of them is steeper than the last. Now this won't go on forever but it tells me that the amount of buying in the stock is increasing and the amount buyers are willing to pay is also increasing. Maybe it will just stay at the current pace and the price will follow uptrend line #3. If that is the case, then I would expect to make >5% per quarter including the current dividend. Yes, I said "greater than 5% per quarter". This idea is sounding way too rosy at the moment so lets talk about the risk. The risk is that FTR is not going to stay above uptrend line #3. There is also a risk that it won't stay above uptrend line #2 or even uptrend line #1. There are many ways to protect yourself between now and those possible breaches but anything is possible. Your first high probability downside bet would come into play if FTR closes below uptrend line #3. The longer the price stays below uptrend #3 the better the chances are the stock price will continue to fall to uptrend line #2. After that it could drop to uptrend line #1 or below. If you are not worried about how rosy this idea is sounding and you are curious about going long, let me tell you what I see in the chart. At the moment, I would say FTR is coming back to a level that investors feel comfortable with. What is that level? Your guess is as good as mine. My guess though is uptrend line #3. From the time the downtrend line broke in early 2014 to now, uptrend #3 is the place where the stock has found support. Maybe it will happen again. There are a couple horizontal lines of potential support I see on the chart as well. These could also be places where the stock price decides to turn around and continue its ascent. Those levels are $7.10 and $6.80 "ish". I would not buy stock in anticipation of these levels working. I would wait and watch to see what the action looks like at these levels. Why? Well if you buy tomorrow anticipating a turn around at $7.10, and it doesn't happen, you will lose money until it does turn around. If FTR continues to fall to uptrend line #3 you could lose about 9% of your investment. The point is to buy as close to the support level as possible IF you see signs of the turn around. If you are buying for a long term investment and the dividend FTR offers, you might feel like there is no reason to wait. And you may be right to a point. But I will offer this. Assume a $1000 investment. Every $0.25 less you pay for the stock equals about 5 additional shares. Those 5 additional shares (per $1000 invested) means 5 less ten and a half cent dividends every quarter from now until you sell the stock. What if this is the beginning of a 7 year uptrend in FTR? Those lost dividends would add up over time! Not to mention the compounding you would lose out on as well.
F
by TheTrendLineInvestor
4