Compound, Compound, Compound Your Wins!
Bonjour to all the traders out there. As we continue on our journey across Europe and our flexible trader lifestyle, we bring you our latest musings from France!!
Last time we spoke about Risk:Reward versus win-rate and showed the table below to visualise how the higher the risk, the less wins you need to make:
But did you know that even if you only put one 2:1 Risk:Reward trade a day, and even if you only win three trades a week, you can still grow your account by over 280% in a year through the power of compounding.
That’s a 42% win rate, risking 1% per trade, and winning 2% of your account each trade. If you put on seven a week, your three winners make you 6% and your four losses lose you 4%. This means you aggregate 2% account growth each week. Let’s look at how that can impact your account over 52 weeks starting with a $5000 account.
That’s a 280% increase on your account in a year.
Don’t forget that VEMA Trader can do all the maths for you! Assuming that you are tagging the trades you want to isolate into a specific analysis, or you can use the system generated tags (shorts, longs, BTC, ETH, day, time etc) OR you can simply do a total analysis like this one: