AtoZ Markets - Imagine you have won a lottery, and you have an option to either pick a million dollars immediately right now or a penny doubling every day for 30 days. Which would you choose? Most people will choose $1 million as their preferred option. They don't realize the power of compounding.
One penny is worth more than one million dollars!
This is compounding money for incredible returns. This is Jesse Livermore's quote:
" If a man didn't make any mistakes, he'd take over the world within a month. But if didn’t profit from his mistakes, wouldn’t possess as a blessed thing."
What is the problem with the penny-a-day double formula math ? Nothing, really. You are only looking at the cent multiplied as a simple number, and not a cumulative amount.
This mindset is very dangerous, especially in Forex trading. While you may be making a profit and increasing your account by 3-4 times, if you make a big mistake you can lose all of your money. You need to be able to manage your risk.
Forex trading with an AtoZ broker is safe and secure:
For thirty days, double the amount of a penny each day to get $0.01, $0.02, $0.04, and so forth.
You'll have $163.84 on day 15, and $5,242.88 on day 20. Keep multiplying those pennies until you reach $5,368,709.12 by the end of 30 days.
It's not bad at all!
That's also the beauty of compounding Forex trading. You'll increase your wealth by compounding your initial investment and the interest it earns.
Although there are many versions of this story, the principle remains the same: If you allow interest to accrue (and you keep that money), you can end with much more than if your accepted an inordinate amount and just stayed with it.
In the real world, double a penny
Although the double-a-penny concept is fun and entertaining, it does not reflect the reality .
You will not only be hard-pressed finding something that offers a 100% daily rate of interest, but also you will have to deal with many real-life challenges.
Many people are growing their businesses or investing in the stock market. They want to invest as much as they can into their stocks, Forex traders, or cryptocurrency investments. They are trying to make the most of compounding interest and running the same double-a-penny simulation in their lives.
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Many of them are making good money and want to return to the business. But they don't have the time. Why? Mental challenge!
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Spending on status symbols and paying taxes
The biggest speed bump is when they have to overcome a mental obstacle. A penny can be doubled, a dollar or even $100. The bigger your investment account, the greater the mental pressure.
The key takeaway
The main takeaway from this is invest early and often. The best returns and gains are always made later in life. Even though a modest return of 5% might seem small, if you begin investing in your portfolio now, it may not seem like much money. What about 30 years from now? As you get closer to retirement, you will start to see huge returns if you earn a 5% annual return.
You should remember that investing is a long-term endeavor. Don't expect to double your investment in the next 3-5 years. Your goal should be to increase your wealth over time.
Do you need to trade forex by yourself?
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Dr Yury Safronau is a PhD in Economics and our in-house trade expert. He will give you his top forex, stocks and metals to buy or sell daily.
Since 2015, his trading strategies that are based on nonlinear dynamic models have earned more than 65000 pip profits. There are strong buy/sell signals in several markets that you shouldn't miss.
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