Saturday, July 19, 2014

Power Of Compounding

Disclaimer: Trading leveraged products such as Forex and CFDs may not be suitable for all investors as they carry a high degree of risk to your capital. Please ensure you fully understand the risks involved before trading, and if necessary seek independent advice.

Formula for compounding

P = A ( 1 + i )t

A = initial amount
i = average percentage of increment per compounding period
t = number of the periods the amount is compounded for

Let's say you are earning 20% (0.20) per month with initial amount of 1000USD.
Then the total of your earnings in a year with the period of (t = 12 months) will be,

P = 1000 ( 1 + 0.20 )12
P  = 1000 ( 8.916 )
P = 8916

Calculations shown below are not real.
This kind of trading considered to be high risk.
If you can earn more than those shown below, you are putting your capital at higher risk.

High Risk, High Reward.
( More trade, High leveraging )
Low Risk, Low Reward.
( Less trade, Low leveraging )

See what can you do with USD1000

 5% earnings per week in 2years.
Total: USD160,000

10% earnings per week in 2years.
Total: USD20,000,000

10% earnings per month in 6years.
Total: USD950,000

20% earnings per month in 6years.
Total: USD500,000,000

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