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The calculations are as follows:
%80 win - %20 loss = return of %60.
If one places $10,000 on each trade, once per week,
52 times per year, this results in
52 * 6,000 = $312,000.
If one re-invests the original principal + the
profit of each trade the formula is
Principal * (1 + Interest) ToThePowerOfNumberofTrades.
This results in the amount of
10,000(1 + .6)^52 = 10,000(41,137,613,933) =
$411,376,139,330,300.
Don't be astonded by the amount, this is just the
result of compounding. 1 penny, if doubled every
week, after 1 year, would result in the sum
of $225,179,988,136,850. Thats 225 Trillion.
Kohath
> Kohath,
>
> I looked at your numbers below and there are a few
> things that do not make sense in sugesting that Ira's
> system would make him richer than Gates. I'll show why
> $50,000 grows to only one Million or so in a year.
>
> We start with the basics...
> 80% winners 20% losers
> 60% net winners
>
> 40 trades a year in bonds and S&P
> average net per winning bond trade $2930 S&P 4965
> average loss 1060 bonds 2535 S&P
>
> Assuming that a trader starts with 50K and has 4
> winners and 1 loser in every cycle. Trades one S&P and
> two bonds per signal (per 50K in account). After every
> cycle the trader re sets the number of contracts to
> trade in the next cycle by seeing how many units of
> 50K the trader has. i put the numbers in Excell and
> after a year 50K turns into a million and then the tax
> man takes 1/2 of it away.
>
>
> Good Trading
> Dick
>
> --- Neal Hughes <neal@xxxxxxxxxxxxx> wrote:
> > At 09:41 PM 6/29/99 -0500, you wrote:
> > >If there is in fact a system that is %80 / 1 on 1,
> > and if that system
> > >traded once per week, the system should give a
> > return of (0.8 * 1) - (0.2 *
> > >1) = 0.8 - 0.2 = 0.6. This would be multiplied
> > times 52 weeks, or 52 * 0.6
> > >= 31.2. Therefore, given the %80 probability of
> > this system with a %60
> > >return, one could expect to gain, given 1 trade per
> > week, with 1 years
> > >trading, placing $10,000 on each trade, 10,000 *
> > 31.2 = $312,000. If one
> > >decided he wanted to own the universe in a few
> > years, simply re-investing
> > >the profits in each trade would result in a balance
> > at the end of 52 weeks
> > >of
> > >10,000 * (1.6) ^52 = $411,376,139,330,300. Not bad
> > for a years trading.
> > >That is 411 Trillion. I would submit if this
> > system actually does exist, I
> > >would certainly like to look into it, to see if I
> > would possibly be
> > >interested in using such a system.
> > >
> > >Kohath
> > >
> >
> ===
> Big Lucky Dick
>
> _________________________________________________________
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