Anyone know this simple Money management calculation?

[TradeTune]

hi,

Lets say you bought a stock at $100, Prices drops to $50 over sometimes.

Basically we assume you need a 100% gain from $50 level to reach breakeven, which isn't true, if i 'm not wrong.

If stocks rise 1% everyday , How many days it takes price to reach $100?
If stocks rise 3% everyday , How many days it takes price to reach $100?
Thanks

 

[SunTrader]

You are talking two different things.

What percent a move is needed to get back whole. It is 100% of $50 added to $50 to = $100.

What percent a day is needed to get back whole. (Let someone else handle that, no free time atm to punch it out on excel)

 

[2rosy]

50 * 1.01 ** 70

 

[Sprout]

hi,

Lets say you bought a stock at $100, Prices drops to $50 over sometimes.

Basically we assume you need a 100% gain from $50 level to reach breakeven, which isn't true, if i 'm not wrong.

If stocks rise 1% everyday , How many days it takes price to reach $100?
If stocks rise 3% everyday , How many days it takes price to reach $100?
Thanks

@1%/day less than 50 trading days if gains are compounded

 

[SunTrader]

That's right. Forgot that formula. Since I've used twice in my life.

Here is a online calc - initial value $50, 1%, 70 days (as 2rosy shows):-

= $100.34

https://www.inchcalculator.com/daily-compound-interest-calculator/

 

[Sprout]

That's right. Forgot that formula. Since I've used twice in my life.

Here is a online calc - initial value $50, 1%, 70 days (as 2rosy shows):-

= $100.34

https://www.inchcalculator.com/daily-compound-interest-calculator/

So much for my napkin math

 

[FreeGoldRush]

Lets say you bought a stock at $100, Prices drops to $50 over sometimes. Basically we assume you need a 100% gain from $50 level to reach breakeven, which isn't true, if i 'm not wrong.

The gain to get from $50 to $100 is 100%. So unless I have misunderstood something I'd say you are indeed wrong.

 

[Statistical Trader]

hi,

Lets say you bought a stock at $100, Prices drops to $50 over sometimes.

Basically we assume you need a 100% gain from $50 level to reach breakeven, which isn't true, if i 'm not wrong.

If stocks rise 1% everyday , How many days it takes price to reach $100?
If stocks rise 3% everyday , How many days it takes price to reach $100?
Thanks

Suppose the stock is at $100 and then drops to $100x. Here x is a decimal less than 1 such as x = 0.4 to represent the stock drops to $40 ($100 * 0.4 = $40).

Then the question is how many periods, n, of a gain of y will get you back to $100.

The answer is to solve this: x * y ^ n = 1, where y is in the form 1.04 to represent a 4% increase for each period.

Example 1:
Let's say $100 goes to $60 (x=0.60) and then afterwards every period is an increase of 1% (y=1.01):

x * y ^ n = 1
0.60 * (1.01)^n = 1
(1.01)^n = 1/0.6 = 1.67
n * log(1.01) = log(1.67)
n = log(1.67) / log(1.01)
n = 51 periods (approx)

Aside: Note that you need exactly 1% for each of the ~51 periods. If you have 26 periods of 0.5% and 25 periods of 1.5% you will do worse. The more variation there is, the worse off you are. eg: 1.05 * 1.05 = 1.1025 (10.25%) whereas 1.04 * 1.06 = 1.1024 (10.24%) and 1.01 * 1.09 = 1.1009 (10.09%).

Example 2:

Let's say $1000 goes to $750 so x = 0.75. (The formula works independent of the starting value.) This time you want to know what percent is required to get back to $1000 in 24 periods:

x * y ^ n = 1
0.75 * y ^ 24 = 1
y ^ 24 = 1/0.75 = 1.33
y = 1.33 ^ (1/24)
y = 1.01206 -> 1.206% (approx)

 

[murray t turtle]

hi,

Lets say you bought a stock at $100, Prices drops to $50 over sometimes.

Basically we assume you need a 100% gain from $50 level to reach breakeven, which isn't true, if i 'm not wrong.

If stocks rise 1% everyday , How many days it takes price to reach $100?
If stocks rise 3% everyday , How many days it takes price to reach $100?
Thanks

%%
AT 1% rise , or even 3%/ everyday, a lot longer almost always to rise to 100\ than drop.
And that's why bears can make [or lose[
money faster.
Much, much longer for a stock to get back to $100 when SPY benchmark drops 1.7% a day or 5% bear drop in a week .But like another trader said;; even an ammo co can do very well in a bear market[bear trend].

 

[DaveV]

You should learn the rule of the 72's, which states that a quick way to estimate how long it will take your initial money to double is to take 72 and divide by the percentage growth rate. In your case 72 / 1 = 72. So it would take approximately 72 days at 1% to double. A 3% growth rate would require approximately 72 /3 = 24 days.