Many people see forex as a way of getting rich fast. One of the ways they hope to get rich fast is by compounding their winnings. This means they will place a trade, win, and then increase the size of their next bet, using the winnings from the previous bet.
This can seem like a great way to make loads of money. First of all what is a reasonable amount of money to start with? Let say units of your currency. How hard could that be? That is achievable in less than a year, just working 5 days per week! But what if we kept on compounding for longer? How long would it take to make 10 million, million, a billion, or even more? Getting to 10 million will only take you another days in total. You will have made million by day , and by day you will be a billionaire!
At day you will have 10 billion, and by day you will have 50 billion. Whether you are betting in Euros, Dollars or Pounds you should now be the richest person in the world by this point. It can be fun to think about compounding winnings in this way, but now it is time to go back to reality. It is just not possible to keep compounding like this.
You can probably do it for a few weeks but then you will run into trouble. As the stakes get higher you will suffer more from emotions as you realise you are playing for much bigger stakes. You are likely to make mistakes, or modify your strategy in a way that makes you less likely to win.
Even if stay as cool as a Vulcan you will run into other problems. When the bets reach a certain level your broker will begin to notice. They may start referring you to the dealer rather than taking your bets direct. This can cause you difficulty with making or closing your bets at the price you want. This will reduce your profit, and maybe turn your winning trades into losers. If your bets get even larger and assuming your broker can handle it you will get the attention of the markets.
Your bets will begin to influence the forex market, meaning your strategy will further break down. The spread has to widen in order for you to get enough buyers or sellers to take your huge trades.
This widening spread will again affect your strategy and in all likelihood will turn a winning strategy into a losing one. As the stakes get higher your chance of making a fatal mistake increase. You only need one big mistake to take your account back down to zero. If you are hoping to win day after day for hundreds of days you are almost certain to be disappointed. By this way atleast u make 10 million in 5 years time…do you think this will also wont work?
In addition to all the aforementioned drawbacks. Mail will not be published required. Do NOT fill this! Disclaimer The contents of this blog do not constitute investment advice. Trading CFDs and Forex can be very risky and you can lose much more than your initial deposit. Seek professional advice before making any trades. Compounding forex winnings to get rich Many people see forex as a way of getting rich fast.
Can I become a billionaire with compounding? It all sounds so easy. Back to reality It can be fun to think about compounding winnings in this way, but now it is time to go back to reality. If you like this post please consider linking to it using this code: Investment Trends CFD survey results.More...