The Power of Compounding #3

With the previous examples, we can see that no matter the size, Compounding will eventually overtake simple increment. It's just a matter of time.

Another important thing to take note, is when you have a losing streak, risking in simple amount can wipe you out. If you have $1000 in capital, and you risk $100 each time, a 10 losing streak will wipe out 100% of your capital, not if you risk in percentage.

Here is how we make use of this knowledge: when you risk, always risk in percentage of your capital.

Risking in Percentage:

Loss count	Capital	Loss amount	Win count	Capital	Win amount
	1000			1000
1	900	100	1	1100	100
2	810	90	2	1210	110
3	729	81	3	1331	121
4	656.1	72.9	4	1464.1	133.1
5	590.49	65.61	5	1610.51	146.41
6	531.441	59.049	6	1771.561	161.051
7	478.2969	53.1441	7	1948.7171	177.1561
8	430.46721	47.82969	8	2143.58881	194.87171
9	387.420489	43.046721	9	2357.947691	214.358881
10	348.6784401	38.7420489	10	2593.74246	235.7947691

Risking in fixed amount:

Loss count	Capital	Loss amount	Win count	Capital	Win amount
	1000			1000
1	900	100	1	1100	100
2	800	100	2	1200	100
3	700	100	3	1300	100
4	600	100	4	1400	100
5	500	100	5	1500	100
6	400	100	6	1600	100
7	300	100	7	1700	100
8	200	100	8	1800	100
9	100	100	9	1900	100
10	0	100	10	2000	100

Winning or losing, risking in percentage is the better option.