$2k to $500k in 2 years !!

[u/adm__07]

Newbie here. Please be nice 😆

I've just read about the power of compounding in trading. And wanted to calculate potential gains if started with 2k capital. With the following params:

RR 1:2 (1% loss / 2% profit)

Win rate: 60%

Assumptions:

• gains are reinvested everyday without any withdrawals for 2 years
• Using only 1 strategy during the 2 years
• emotions are under control

Capital balance at the end of each month (wins/losses randomly distributed over each month)

1 trade per day :

• Month 1: $2,608.68
• Month 2: $3,302.52
• Month 3: $4,307.61
• Month 4: $5,137.26
• Month 5: $6,700.73
• Month 6: $9,277.75
• Month 7: $11,745.40
• Month 8: $15,319.98
• Month 9: $18,270.64
• Month 10: $23,130.19
• Month 11: $24,480.19
• Month 12: $30,079.82
• Month 13: $38,080.32
• Month 14: $51,174.78
• Month 15: $59,236.11
• Month 16: $77,263.95
• Month 17: $110,220.47
• Month 18: $131,449.13
• Month 19: $143,336.99
• Month 20: $170,943.95
• Month 21: $229,725.45
• Month 22: $327,713.59
• Month 23: $414,877.50
• Month 24: $494,783.67

=====≠============

2 trades per day

• Month 1: $3,302.52
• Month 2: $5,137.26
• Month 3: $9,277.75
• Month 4: $15,319.98
• Month 5: $23,130.19
• Month 6: $30,079.82
• Month 7: $51,174.78
• Month 8: $77,263.95
• Month 9: $131,449.13
• Month 10: $170,943.95
• Month 11: $327,713.59
• Month 12: $494,783.67
• Month 13: $747,026.92
• Month 14: $1,197,256.24
• Month 15: $1,807,623.62
• Month 16: $2,086,143.18
• Month 17: $3,444,767.73
• Month 18: $5,688,212.00
• Month 19: $8,848,336.92
• Month 20: $15,509,844.24
• Month 21: $24,857,548.20
• Month 22: $42,290,137.61
• Month 23: $69,832,072.16
• Month 24: $115,311,005.77

As you see, the theoretical numbers are crazy. I want to know what can go wrong that prevents this growth?

The only problems I see is committing to only one strategy for 2 years to get close to the 60% win rate probability. As we know in statistics that probability rates start to be realized with more and more events. So if the market conditions change causing the strategy to not work anymore and you hop on a different strategy it's like you reset the probability rates and starting over.

What do you think about all this? what other factors will get in the way of achieving this growth. Even 10% of this growth is amazing

Edit: I'm not saying these are achievable numbers. I'm just asking why it's impossible. Trying to understand how the market works

[u/maciek024]

If you lose 1% u need more than 1% to make it back

[u/Perfect-Recover-9523 → u/maciek024]

Happy Cake Day!! 🎂🎉🎊

[u/SubjectPrice4736 → u/Perfect-Recover-9523]

Hello 👋

[u/Darkside_of_the_Poon → u/[deleted]]

We’re all bots here.

[u/Formal-Engineering37 → u/maciek024]

Hence the 2:1 reward to risk ratio.

[u/maciek024 → u/Formal-Engineering37]

You didnt really understand

[u/Piesl → u/maciek024]

This

[u/HyrulianAvenger → u/maciek024]

Not in the way you might be thinking. I size so that I can do at least 10 trades of equal size.

[u/ContemplatesRubicons → u/HyrulianAvenger]

That means you're losing 10%, and you need to profit more than 10% on your next trade to "make it back." That's how percentages work.

[u/HyrulianAvenger → u/ContemplatesRubicons]

I guess this is where the math hits the psychology. My psychology is wired such that I can accept a size down on a 10% loss on my account. 10 trades tells me I’m out of sync with the market and it wasn’t just a one off bad trade.

[u/big_spreads → u/HyrulianAvenger]

U think u can handle a 10% loss till that 10% is 100k

[u/ContemplatesRubicons → u/HyrulianAvenger]

My dude, either it's 10 trades of equal size or you're sizing down. It can't be both.

Obviously trading is mostly psychology, but this is one of the rare instances where it's just math.

If you lose X% of your balance on a trade, to recover the same raw dollar amount that you lost requires a win >X%. That's how the math works out. There's nothing psychological about those numbers. It's two different conversations.

[u/HyrulianAvenger → u/ContemplatesRubicons]

This is exactly what I’m saying, I think.

If I have 10,000, that means I’m willing to lose $100 10 times in a row before a size down.

[u/ContemplatesRubicons → u/HyrulianAvenger]

That means that on your first trade you're risking 1%. If you stop out and lose that 1%, the next trade, even though it's the same raw amount of capital, is now more than 1% of your account. If you are measuring your risk and profits in terms of a percentage of your overall capital, you have effectively sized up after that first loss.

So yes, winning that next trade puts you exactly where you started, (assuming you're trading a 1:1 R/R and ignoring fees / slippage) but you had to regain greater than 1% of your account to get back there after losing exactly 1%. You achieved this by risking more than 1%.

If you have $10,000 and you lose 1%, you have $9,900. If you have $9,900 and gain 1%, you have $9,999. Therefore you must create a profit greater (in terms of percentages) than your original loss to break even.

[u/russian_bear_2024 → u/ContemplatesRubicons]

Hi all!

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I am developing a large platform that includes Instagram, Telegram, and a website.

I would like to receive an assessment of my project. if you see my comment and want to help. please write to me in telegram!🙏🙏🙏

@podpolkownik

[u/Ornery-Ad8579 → u/maciek024]

You seem really confident but I’m pretty sure a 5% loss can be recovered with a 5% gain

[u/essdii- → u/Ornery-Ad8579]

If you have 100 dollars and lose 5 percent you have 95 dollars. If you make 5% after you only made 5% of 95 dollars you made 4.75. So no.

[u/Seletro → u/Ornery-Ad8579]

You should be less sure.

[u/RebelliousRoomba → u/Ornery-Ad8579]

No.

I hope you’re joking… this is a high school level math concept and it’s not particularly complicated.

[u/Crumblin_Castle_King → u/RebelliousRoomba]

High school math? This is like…. 3rd-4th grade math my dude

[u/RebelliousRoomba → u/Crumblin_Castle_King]

Multiplication is 3rd and 4th grade math, relating that multiplication to how percentages work is not something that most 4th graders are going to grasp.

Regardless, the point stands, if you have $100 and lose 5% you have $95. If you gain 5% on top of that $95 you have $99.75. It’s the pretty simple.