Is compounding necessary?
Feb 24, 2013 at 16:39
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.
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.
Member Since Jan 19, 2013
251 posts
Feb 24, 2013 at 16:41
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.
Feb 24, 2013 at 20:46
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.
Member Since Jan 19, 2013
251 posts
Feb 24, 2013 at 22:07
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.
Member Since Jan 19, 2013
251 posts
Feb 24, 2013 at 22:53
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.
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Member Since Jan 19, 2013
251 posts
Feb 24, 2013 at 23:14
Price went as low as 124.12 before hitting the stop loss of 10. :)
Member Since Nov 20, 2012
10 posts
Feb 25, 2013 at 04:41
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.
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.
Feb 25, 2013 at 07:21
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.
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.
Member Since Oct 27, 2011
86 posts
Feb 25, 2013 at 07:27
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
Member Since Jan 19, 2013
251 posts
Feb 25, 2013 at 07:28
Benny it was I who said that. Yet. I'll repeat it again! If you have a pamm manager. In which he requires a deposit of say 5k. If he was to gain 50% profit. Which would have your account at 7500 usd. He doesn't have to compound, nor would he have had to had compound in order to have gained your 50% profit.Compounding is when you use profits in order to gain more! If i use the same lot size over and over again, then I would never be compounding. In the case of a PAMM manager it depends on the risk he feels like taking.
Member Since Jan 19, 2013
251 posts
Feb 25, 2013 at 12:05
Hi nickMcdonald. I've taken the time to look at your accounts. It seems as if compounding has caused you to not gain much profit after all. Your gaining all these pips, but giving the profit right back on losing positions. Prime example why compounding isn't worth it!
Feb 25, 2013 at 12:13
BellaVista507 posted:
Hi nickMcdonald. I've taken the time to look at your accounts. It seems as if compounding has caused you to not gain much profit after all. Your gaining all these pips, but giving the profit right back on losing positions. Prime example why compounding isn't worth it!
Compounding isn't the cause of his losses. It's the way he trades. Please blame the right thing. Compounding needs a functional system otherwise it doesn't work. Just like everything else.
Member Since Oct 27, 2011
86 posts
Feb 25, 2013 at 13:51
BellaVista507 posted:
Hi nickMcdonald. I've taken the time to look at your accounts. It seems as if compounding has caused you to not gain much profit after all. Your gaining all these pips, but giving the profit right back on losing positions. Prime example why compounding isn't worth it!
I disagree and will be using my entire portfolio of systems to show you how to compound effectively.
My goal is to turn $30k into $300k within the next 24months.
Find your passion and work hard
Member Since Jan 19, 2013
251 posts
Feb 25, 2013 at 13:55
Ironman posted:BellaVista507 posted:
Hi nickMcdonald. I've taken the time to look at your accounts. It seems as if compounding has caused you to not gain much profit after all. Your gaining all these pips, but giving the profit right back on losing positions. Prime example why compounding isn't worth it!
Compounding isn't the cause of his losses. It's the way he trades. Please blame the right thing. Compounding needs a functional system otherwise it doesn't work. Just like everything else.
Yes your correct ironman. Compounding doesnt cause losses. It is the system which he uses. Yet, I dont think he will be able to pull it off. Especially when we have to wait 24 months for such results.
Member Since May 08, 2012
321 posts
Feb 25, 2013 at 16:33
(edited Feb 25, 2013 at 16:34)
NickMcDonald posted:BellaVista507 posted:
Hi nickMcdonald. I've taken the time to look at your accounts. It seems as if compounding has caused you to not gain much profit after all. Your gaining all these pips, but giving the profit right back on losing positions. Prime example why compounding isn't worth it!
I disagree and will be using my entire portfolio of systems to show you how to compound effectively.
My goal is to turn $30k into $300k within the next 24months.
Would you care to share the systems that you are trading? If any of them are a grid or grid/martingale, your out of your mind. Why don't you share your portfolio page to so you can 'learn us'.
War is when your government tells you who the enemy is. Revolution is when you figure out, for yourself, who the enemy is.
Member Since Aug 22, 2012
170 posts
Feb 26, 2013 at 07:35
The goal of compounding is to increase your earnings capability - but patience is the key as I've found out the hard way, it's wise to reduce your risk as your account grows. The other side of the coin is that the bigger your account - the lower the amount of leverage is available: so I'm thinking (I haven't got there yet) in the future when (if) I get to 25k I'll split that into two accounts so as to keep the 400X leverage. Only hassle is having to buy more licences for retail EAs.
So basically what I'm saying is rather then continually grow and compound one account, you might want to 'split' it and keep your high leverage.
So basically what I'm saying is rather then continually grow and compound one account, you might want to 'split' it and keep your high leverage.
Member Since Jan 19, 2013
251 posts
Feb 26, 2013 at 14:19
Michigander posted:NickMcDonald posted:BellaVista507 posted:
Hi nickMcdonald. I've taken the time to look at your accounts. It seems as if compounding has caused you to not gain much profit after all. Your gaining all these pips, but giving the profit right back on losing positions. Prime example why compounding isn't worth it!
I disagree and will be using my entire portfolio of systems to show you how to compound effectively.
My goal is to turn $30k into $300k within the next 24months.
Would you care to share the systems that you are trading? If any of them are a grid or grid/martingale, your out of your mind. Why don't you share your portfolio page to so you can 'learn us'.
All you would have to do is click my name. That would then forward you to my porfolio. As for teaching, Im not interested in teaching.Nor am I interested in selling an EA or recommendations. Should I reach 500% profit by next months end. I'll then offer anyone interested a chance to be my PAMM clients. Since adding my first account. You'll see that I have since then added a client who has brought 7k.
Mar 11, 2013 at 06:43
I don't quite understand what the debate is about. As some of you have pointed out, compounding is simple. If you have an account with $1,000 in it, and you set your standard order to always risk 1% of balance, while setting a take profit at 2-3% of balance, then, assuming your strategy is profitable in the first place, you will have the power of compounding working for you. Your probability of blowing up the account wouldn't change, as you'd still only be risking 1% of the account each time you trade.
I do think that at some point it would be prudent to start pulling some of the profits out, but that would just be for peace of mind, and to actually reap some of your rewards. For pure growth though, I don't see why you wouldn't want to compound as much as you could.
I do think that at some point it would be prudent to start pulling some of the profits out, but that would just be for peace of mind, and to actually reap some of your rewards. For pure growth though, I don't see why you wouldn't want to compound as much as you could.
Member Since Jan 19, 2013
251 posts
Mar 11, 2013 at 07:29
tlswink posted:
I don't quite understand what the debate is about. As some of you have pointed out, compounding is simple. If you have an account with $1,000 in it, and you set your standard order to always risk 1% of balance, while setting a take profit at 2-3% of balance, then, assuming your strategy is profitable in the first place, you will have the power of compounding working for you. Your probability of blowing up the account wouldn't change, as you'd still only be risking 1% of the account each time you trade.
I do think that at some point it would be prudent to start pulling some of the profits out, but that would just be for peace of mind, and to actually reap some of your rewards. For pure growth though, I don't see why you wouldn't want to compound as much as you could.
In theory it sounds good. Yet, the system you use is what is actually the main point.
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