So given the choice, what will you choose? Big and less frequent? Or small but more frequent? Wait! Where is it going? If you're thinking dirty, I won't blame you.
What I'm talking about is the profit in cryptocurrency trading. Do you prefer small but frequent profits or big ones but less frequent? You must be thinking why big ones have to be less frequent.
Which Course to Choose?
The reason is that almost all coins go up and down by small margins on a daily basis. But not all coins go up or down by 100 % every 24 hours. The 5x profits are far less probable than 50 % profit.
It is easier and more feasible to fluctuate by 15 % than to gain 137 % growth. If the target is in the range of 100-300 % profit, then it comes at a cost. You have to wait for that to happen and it may take many weeks to reach there, if at all.
But consider this scenario. You mark 3 to 4 coins which show frequent dips and rises, the zigzags in price. Let's say you start with $100 and keep the target of 10 % profit on all trades.
If the research is done well, the target of 10 % profit can be achieved in less than a week. But suppose it takes a week to get 10 % profit on your trades.
Let's do some math.
The Power of Small Profits
Initial Investment = $100
- Week 1 = $110
- Week 2 = $121
- Week 3 = $133.1
- Week 4 = $146.31
- Week 5 = $160.63
- Week 6 = $176.06
- .....
- Week 42 = (1.1)⁴²x100 = $5476.37
To say this in plain language, starting with $100 and setting 10 % profit margin on every trade of yours (and supposing that it materializes every week on average), you can make $5476. To talk in terms of percentage, we are looking at 5376 % profit in just 10 months.
That's the power of compound interest. The Richest Man in Babylon advised me never to underestimate the power of compound interest. And that is how I am going to do crypto trading now. 10-15 % profit margins and frequent trades can make everyone rich, as you can clearly see from the example above; at least theoretically.
Did you like this post full of trading insights? Do you see value in small but frequent profits? Did you learn something new today?
Do share your thoughts and please resteem the post.
