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How your account can compound by Equitimax
 

How your account can compound by Equitimax

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    How your account can compound by Equitimax How your account can compound by Equitimax Document Transcript

    • Equitimax  explains  how  money  compounds   Assuming  that  you  can  make  a  steady  return  of  2,  3  or  4  %  a  month  this  document  will  show  you   how  much  this  actually  makes  you  over  a  year,  two  years  and  five  years.   The  Equitimax  managed  trading  service  and  in  particular  the  Blue  Portfolio  creates  a  series  of   individual  trades  (around  100  per  month),  these  are  smallish  trades,  where  the  portfolio  risks  around   0.7%  per  trade  and  this  will  allow  the  portfolio  to  grow  as  the  winning  trades  average  out  at  around   double  the  risk,  so  the  portfolio  can  grow  without  a  serious  potential  for  loss.   The  return  of  2%  to  4%  a  month  are  achievable,  so  what  does  that  all  mean  and  how  would  it  affect   your  account  if  you  were  involved.   Compounding  tables     This  table  shows  the  returns  of  2%  a  month  on  a  5,000,  10,000  and  20,000  pound  account.                   The  return  grows  to  just  over  24%  per  year  when  we  add  the  2%  onto  each  month  and  compound   the  results.  
    • These  next  tables  show  the  increase  of  the  monthly  return  by  just  1%,  this  series  of  tables  are   looking  at  3%  per  month  and  the  impact  that  has  on  an  account,  you  can  see  the  staggering  effect  it   has  on  the  projected  return.         These  returns  increase  to  38%  per  year  when  compounded  by  3%  each  month.   The  next  series  of  tables  looks  at  an  increase  of  another  1%  per  month,  so  the  total  monthly  return   added  to  each  figure  is  now  projected  up  to  4%  each  month  which  is  very  close  to  1%  per  week.    
    •       The  returns  have  grown  up  to  53%  per  year  in  this  projection.  These  are  interesting  studies,  as  it   does  start  to  show  the  impact  of  high  returns.       This  document  is  just  a  reference  document  that  can  highlight  how  a  high  return  will  grow   exponentially  and  deliver  an  opportunity  for  people  to  create  real  returns   Compounding  over  ten  years   The  next  set  of  tables  displays  the  returns  over  ten  years  and  the  difference  between  2,  3  and  4%.   This  first  table  is  a  2%  return  which  compounds  over  24%  in  the  year  and  then  that  is  projected  over   ten  years  and  you  can  see  the  amazing  1065%  return.     This  next  table  shows  3%  compounded  over  twelve  months  which  creates  a  38%  return.  
    •   This  table  shows  a  38%  return  over  10  years,  which  compounds  to  a  staggering  3,456%  return.   The  last  table  is  what  occurs  when  the  return  is  around  1%  a  week  or  4%  a  month.  This  over  a  year   creates  a  compounded  53%  return.  Now  look  at  this  over  ten  years.   Compounding  these  kind  of  returns  are  of  course  just  calculation  on  a  spread  sheet  and  no  returns   would  provide  such  a  steady  amount  each  year.  This  is  of  course  just  laid  out  so  you  can  see  why   people  do  chase  these  larger  returns     The  percentage  return  is  over  10,075%,  this  is  amazing  and  is  of  course  is  only  an  exercise  but  it  is   very  interesting.     How  could  you  create  these  types  of  returns  then?   Well  the  simplest  way  is  to  find  a  trading  system  that  will  create  5  trades  a  day,  were  by  the  end  of   the  week  there  are  25  trades  and  each  trade  risks  0.5%  of  the  portfolio,  if  you  make  13  winners  and   12  losers  you  have  made  0.5%  a  week  or  2  %  a  month.   Take  this  one  step  further  and  all  we  have  to  do  then  is  to  trade  10  trades  a  day  which  equals  50   trades  a  week  and  if  we  create  24  losers  and  26  winners,  we  have  increased  the  return  to  1%  a  week   or  4%  a  month.   It  is  not  hard.  It  is  just  a  long  process  to  find  these  systems  and  once  they  have  been  identified  we   automate  them,  using  algorithms  to  manage  the  trades  twenty  four  hours  a  day.   One  of  our  next  articles  will  cover  algorithmic  trading  in  detail.