What's wrong with compounding returns?

Discussion in 'Trading' started by achilles28, Feb 15, 2006.

  1. I agree. I believe in just letting them compound. I have a full-time job, and I automate my systems, so...
     
    #51     Feb 20, 2006
  2. What's wrong with compounding returns?
    If you are beyond the newbie stage and managed to escape that big pool of losers, you would not bother asking this question.

    Any profitable trading method has its upper bound on scaling up. It would be stupid not to keep "compounding" till that limit is reached. After that, you arrived in the "constant" return phase. This simple observation always applies albeit in a manner determined by the traded instrument and the method used.

    The often repeated mantra that you require lots of capital is absolute nonsense once you understand the above. It only affects the period of time before you reach the "constant" return phase.
     
    #52     Feb 21, 2006
  3. Exactly. Unfortunately, I have yet to hit that "constant" return phase... LOL.
     
    #53     Feb 21, 2006