I believe many traders have had this experience. One day, they picked up a calculator and calculated. Assuming that their current starting capital is 10,000 yuan and the annual profit rate is 50%, the calculator was surprised to find that it only takes 12 years for this money to become 1 million yuan. Even if the worst is 30% per year, it only takes 18 years for this money to become 1 million yuan.
This number game can be even more magnificent. Assuming that their starting capital is 100,000 yuan and the annual profit is 50%, it only takes 17 years for this money to become 100 million yuan. Even if the worst is 30% per year, it only takes 27 years for this money to become 100 million yuan. Moreover, from our actual experience, it does not seem difficult to make a profit of 5% per year, and 30% is completely achievable.
So, why has such a seemingly reasonable and rigorous dream of compound interest with mathematical logic never become a reality? The answer to the question is not complicated. It is the loss of transactions and the decline of funds that seriously weakened the atomic bomb power of compound interest and eventually turned the atomic bomb into a dud.
Which trader with more than ten years of trading experience doesn't have some experience? The reason why you are still losing money is that you violate the law of certainty, that is, when it is not suitable to trade, you can't control your hands and make a lot of uncertain transactions.
To be honest, including myself, as long as I violate the law of certainty in actual combat, that is, when I make those uncertain transactions, I will definitely suffer losses, without exception. Every loss will lead to the decline of assets, and decline is precisely the enemy of compound interest.
Compound interest growth is of atomic elasticity, but the decline caused by losses is also of atomic elasticity. In this way, those seemingly careless and dispensable transactions eventually turn the seemingly simple fact of compound interest growth into an unattainable dream.
