The addition of monthly trading profits to the principle capital invested is called compounding. Rather than withdraw profits, you proportionately increase trading position sizes meaning that profit for the next trading month is earned from the principle capital plus the previously accumulated profit.
The arithmetic of compounding ensures that capital invested starts to generate disproportionately higher returns over a given time-scale making the combination of financial trading and compounding such a powerful tool.
The most important component that investors should appreciate about compounding is the immense value of time. The initial step is to invest a given amount of capital. Once the initial capital starts to generate some returns, those returns are re-invested and start earning, and as the returns on the returns start earning, the capital starts building up at an enormous pace.
To be able to consistently compound capital at a given percentage rate an investor or individual can utilise investment vehicles that can generate high returns on capital. Investing in financial markets with our help provides you with opportunities to earn excellent returns on capital from a wide range of markets such as Forex, Shares, Bonds and Commodities. Investors can participate through a range of investment vehicles such as Financial Trading, Spread Trading & CFDs.
Disclaimer – Futures, CFD, Margined Foreign Exchange trading, Warrants, Options and Spread Betting all carry a high level of risk to your capital. Only speculate with money you can afford to lose. Futures, CFD, Margined Foreign Exchange trading and Spread Betting may not be suitable for all customers, therefore ensure you fully understand the risks involved and seek independent financial advice if necessary.
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