Understand the Compound Effect
Turn concepts into skills. Learn what compounding really means in finance and trading with plain language, examples and step by step applications. Each explanation connects to a tool or checklist so you can apply what you learn immediately.
What you will learn
- Compounding explained: How small edges grow into meaningful results over time.
- Consistency over intensity: Why steady inputs beat sporadic effort.
- Risk as foundation: Survival math, drawdowns and position sizing basics.
- From idea to routine: Checklists and feedback loops for daily execution.
Quick examples
Steady growth: start with 1,000 and grow it by 40 percent each year. After one year it becomes about 1,400. After five years it passes 5,000. After ten years it reaches nearly 29,000. The point is not precision but how consistent gains accelerate over time.
Risk–reward in action
You do not need to win every trade. With a 40 percent win rate and a 1 to 3 risk–reward ratio, wins are large enough to more than offset losses. Repeat the same risk size and rules, and the edge compounds.