I agree. I believe in just letting them compound. I have a full-time job, and I automate my systems, so...
Quote from NihabaAshi:
There's nothing wrong with compounding returns.
However, the reality is that most traders are not able to do such for personal reasons (pay the bills, family to support et cetera).
Also, don't forget about the IRS...they are dipping into your pockets so anybody that saids they take 100% of their profits and compounds it...
You need to take what they say with a grain of salt unless they meant that they take 100% of what's remaining of their profits and compounds it.
In fact, most of the guys I know that are profitable and are able to compound their returns (100%) are of the following:
* Single with no debts
* Single and still living at home with the parents
* Single with a girlfriend paying the bills
* Married with a spouse paying the bills
* Living off some sort'uv inheritance or windfall income
Everybody else (those that are profitable) are just slowly growing their accounts just like anybody else with a job.
Therefore, if you got bills to pay...
Your only choice is to extract some profits eventhough you obviously would love to compound 100% of it.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Quote from nononsense:
What's wrong with compounding returns?
If you are beyond the newbie stage and managed to escape that big pool of losers, you would not bother asking this question.
Any profitable trading method has its upper bound on scaling up. It would be stupid not to keep "compounding" till that limit is reached. After that, you arrived in the "constant" return phase. This simple observation always applies albeit in a manner determined by the traded instrument and the method used.
The often repeated mantra that you require lots of capital is absolute nonsense once you understand the above. It only affects the period of time before you reach the "constant" return phase.