Rule of 72

( this is THE understanding that will set you apart from the rest ! )

This is the infamous formula for approximating the time it will take for a given amount of money to double at a given compound interest rate.
FACT:
              $100 will DOUBLE in 6 years if earning a compounded annual rate of 12%.
The Math:
                          72 (magic number) divided by 12 (rate of return)
                                                          equals 6 years (repeating event) to DOUBLE.
The Interesting Part of this FACT is:
                if your REPEATING EVENT is your TRADES .....
                                                   then you only need a 12% Rate of Return
(per trade)
                                                              on
6 TRADES to DOUBLE Your Money !!
   
NOT   YEARS !!!!    TRADES !!!
You can hang around hoping and trying to make the "big one", or you can simply make a lot of little trades and still come out way ahead without the exposure during periods of high volatility.
Remember - if you only profit 10% per trade,
                                   you will DOUBLE Your Money in just over 7 Trades!!
The Math:  72 / 10 = 7.2(trades)
Try it, take $1,000 and multiply it by 1.10 and then 6 more times.   You will nearly DOUBLE your $1,000.
Copyright 1998  Ray E. Knecht Consulting Services.
All rights reserved.