Compounding explained Part 1:
1. What does compounding mean?
Simply put, compounding is the percentage of the profits you earn on top of your original contribution plus its earnings from previous periods.
2. How frequently does compounding happen?
Compounding is a permanent process of all funds / contributions of the Daisy Network into Endotech unless one withdraws the profit. It’s all measured with mark to market and ongoing every split second.
3. Which amount is in trading?
The current balance is the actual figure IN trading
4. Will personal accounts ever match the % of the a main fund?
No, as even if you had started from day one of forex ai trading for testing and development you have gotten deducted the performance fee. Therefore your current balance decreased and you are not able to match the fund anymore.
5. Why is the fund's percentage higher than a personal account?
a) The fund's % has to be seen as an INDEX. It's constantly compounding and doesn't calculate any kind of withdrawals
b) You might have withdrawalen your profits, which decreased your current balance. Your compounding mechanism will start from scratch again.
c) The performance fee has been deducted, which also caused your current balance to decrease
d) You have purchased higher tiers. Since the % of profits are based on your contribution, your % has decreased as your contribution has increased.
6. Do you have a general example explaining compounding?
a)Example trading WITH COMPOUND (Let’s say account started with 100K)
On day 1, let’s say we enter with buy 10 lots of EUR/USD and profit was made 1% and now the new balance is 101,000
Day 2 (or same day next trade) we enter to a new buy trade with 10.1 lots EUR/USD and made 1% again and now our new balance is 102,010
Day 3 (or same day next trade) we enter to a new sell trade with 10.2 lots EUR/USD and made .5% and now our new balance is 102,520
Day 4 (or same day next trade) we enter to a new buy trade with 10.25 lots EUR/USD and made 2% and now our new balance is 104,570
Day 5 (or same day next trade) we enter to a new buy trade with 10.45 lots EUR/USD and made 1% and now our new balance is 105,615
Week 1 WITH COMPOUNDING in this example is 5.61% profit.
b) Example trading WITH-OUT COMPOUND assuming the account started with 100K:
On day 1 we enter with buy 10 lots of EUR/USD and profit was made 1% and now the new balance is 101,000
Day 2 (or same day next trade) we enter to a new buy trade with 10 lots EUR/USD and made 1% again and now our new balance is 102,000
Day 3 (or same day next trade) we enter to a new sell trade with 10 lots EUR/USD and made .5% and now our new balance is 102,500
Day 4 (or same day next trade) we enter to a new buy trade with 10 lots EUR/USD and made 2% and now our new balance is 104,500
Day 5 (or same day next trade) we enter to a new buy trade with 10 lots EUR/USD and made 1% and now our new balance is 105,500
Week 1 WITH-OUT COMPOUND in this example is 5.5% profit
So in these examples, you see the first week with compound made $115 more or 11% more.
With trading there are literally a million different scenarios that can be. For example, sometimes if the market has bigger risk, we can can enter into trade only with 5 lots on a 100K balance and sometimes with the same balance, we can enter with 10 lots.
The easiest way of explaining compounding would be this way:
If on average, it took 4 months to double, then if getting the same results for the next 4 months, the account would now be quadrupled (400%) and so on.
7. I don't understand all numbers can you explain?
Total withdrawal + Total fee + current profit (what's available for withdrawal) = total profit
Total profits % is based on current contribution
Current balance - total contribution = current profit
8. If the total profits % is based on current contribution, is an account compounding then, as long as no withdrawals are being initiated?
Yes. Since more is in live trading, you will receive higher profits, only the total profits is calculated on current contribution.
COMPOUNDING EXPLAINED PART 2:
9. How can a personal account be checked best?
The easiest is to take screenshots on a daily basis at the same time of the day. Best is early in the morning or late in the evening. Take notes. You can then see your exact personal earnings.
10. How can I check, if compounding is working correctly?
In case no withdraw is being done, it's great to compare the numbers of your screenshots (explained above) on a weekly basis. You will see, that you will enter the new week with a higher current balance, which will increase you % of current profits.
If you want to have 100% of control, you will have to use 2 accounts. With the first one you withdraw on a weekly basis and with the second one, you won't.
11. How can the weekly or daily % be calculated?
% based on current contribution:
Current profit × 100 ÷ current contribution.
% based on total contribution:
Current profit × 100 ÷ total contribution.
12. How can the gross percentage of profits be calculated? (Weekly, monthly, daily)
Third week = 14.71% of profits and fourth week = 20.59%. So far, if we subtract 14.71% from 20.59% it gives us a profit of 5.88% between week 3 and week 4. This percentage IS ALREADY A COMPOUNDED NUMBER.
The actual profit for that week was, according to the formula used to get the profit percentage without compounding, is the following:
We will first convert the percentages to decimal numbers: 1.2059 (week 4) minus 1.1471 (week 3) = 0.0588. So now we take this result and divide it by the percentage from week 3: 0.0588 ÷ 1.1471 = 0.0512. We now take this result and multiply it by 100:
0.0512 X 100= 5.12%.
THIS RESULT IS THE REAL PROFIT FROM WEEK 3 TO WEEK 4 (WITHOUT COMPOUND = 5.12 and with COMPOUND = 5.88%)!
If we now subtract one from the other we will see, that from week 3 to week 4 thanks to the compounding you have gained 0.76%!
Week 13: 80.70% and week 14 with 87.44%: 87.44% minus 80.70% gives us a COMPOUNDED gain of 6.74% compared to the previous week. Now let's look at the actual profit WITHOUT COMPOUND: (1.8744 - 1.8070) = 0.0674 divided by 1.8070 = 0.0372 and now multiply this result by 100 = 3.72%.
Summary to wrap this up:
From week 3 to week 4, the AI traded actual, NON COMPOUNDED profit of 5.12% so that you see a 5.88% COMPOUNDED profit with a 0.76% DIFFERENCE in your account.
From week 13 to 14 WITHOUT COMPOUNDING "just" a plus of 3.72% was dobe, but we saw a 6.74% gain WITH COMPOUNDING! This is a difference of 3.02% EXTRA thanks to the power of COMPOUNDING.
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