The Rule of 72 - Small Binary Bites Taste Delish
Markets on the move may offer excitement with potential for fast returns. Unfortunately, getting “lucky” on a big boost or breakdown is hard to repeat if a disciplined trading plan can’t be replicated.
By Alan Knuckman
Friday, August 5, 2016 - 00:00
The result of this swing-for-the-fences approach is often sharp swings in equity with large gains AND losses. It’s not for the faint of heart when you are waiting for the next home run trade to make it or break it. The reality of profit/loss extremes is taking too much risk…
Enter binary options. They solve two issues. First and foremost they limit dollar risk - which is the number one focus for all traders. Secondly, a single binary play is more than manageable to develop strategy signals.
THERE IS NO SHAME IN SMALL GAINS.
Any money made, even the smallest profit, is more than you had originally. Scale is the next step for an investment plan. It is often under appreciated how small winners add up. The Rule of 72 tells us how long it takes for an account to double in value based on the annual return percentage.
- 72 divided by an 8% annual return equals nine years to double.
Modest portfolio gains that average 1% a month reduce that multiplier to just six years. Mathematically, a $10,000 account making $100 a month in profit turns into $20,000 in six short years. The bite size binary option can be the basis for the slow and steady success.
The adding zeros theory takes a proven plan and simply expands the dollar size while maintaining the methodology. Start trading one contract then two…so forth until competence and confidence are proven profitable.
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