Compounding

Due to the inability to trade micro-lots on Collective 2, we are unable to demonstrate the benefits of progressive compounding. But we can do simple calculations using the verified trades that have been recorded, live, on Collective 2.

The simplest – and most effective – way to compound would be to increase our lot size after every win in the same proportion that trade increased the account’s equity.

For instance, if we open a trade with 1,000 micro-lots and close the trade with a gain of 1%, we will increase the size of our next set of contracts by 1% to 1,010 micro-lots. Collective 2 only allows us to trade in increments of 1 mini-lot, so effectively, we cannot start compounding the system until its equity has doubled.

Annual Compound by Each Individual Trade

Currently, on Collective 2, our average win is hovering around $170, or 0.34% of the initial account value of $50,000. We have entered 115 trades in 107 days, so we are entering just over one trade a day – this includes non-tradable days – which means we are earning a steady 0.34% per calendar day.

If we compound a $50,000 account at 0.34% per day, we can expect to have grown our account 250% by the end of the calendar year, or a net gain of ~$125,000, or $12,500 on a $5,000 account, or $250,000 on a $100,000 account (and so on.)

Annual Compound every Month

FX Velocity has reliably gained, on average, 10% per month of the initial account value.

So, if we compound a $50,000 account at 10% per month, we can expect to have grown our account ~213% by the end of the calendar year, or a net gain of ~$99,000, or $9,900 on a $5,000 account, or $213,000 on a $100,000 account (and so on.)

Obviously, some of the potency of compounding after every trade is lost.

In the Long Run

The implications of compounding any consistent system over a number of years hardly needs mentioning. If we are able to consistently compound our trading system over a number of years, we will begin to recognize the accumulation of true and substantial wealth reaching into the millions, or even tens of millions of dollars.

In my experience of the consistency of the system at hand – barring a catastrophic change from how the markets have actually performed throughout history, or some insurmountable clerical error – I do not foresee any reason we should not be able to meet the projections above.

Therefore, in a few short years, we will have met the million dollar mark.

What Should You Start With?

Any amount. A $50,000 account is the point where we can start to utilize the gains as income, where any individual would be able to make a livable wage. Also, since the system is essentially scalable at one mini-lot per initial trade entry for every $50,000, we would not be able to demonstrate any lower account value on Collective 2 without risking a margin call (for reasons explained above.)

This is a mechanical system and the numbers mentioned in this blog have been consistent throughout our research. We will realize a steady, slow climb in equity, patiently and faithfully compounding our trades. In time, we are destined to accumulate enough funds to have true security for our future.

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