A Different Way to Think About Compounding

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Rather than increasing deposits, I've been studying a staged compounding approach where each new stage is funded by profits from the previous one.

The concept isn't about predicting the market,  it's about structuring risk differently  .

Let me give you a Numerical Example here :

  • Stage 1: Risk $10 → Target $100
  • Stage 2: Use the $100 profit instead of new capital
  • Stage 3: Risk only part of the previous profit
  • Stage 4: Continue using accumulated profits

The idea is to expose personal capital only at the beginning and let the profits finance the following stages  ..

The challenge, of course, is that this approach still depends on finding high-quality entries

I'm curious to hear your thoughts on this type of money management    .

 
Rachid El Jaafari:

Rather than increasing deposits, I've been studying a staged compounding approach where each new stage is funded by profits from the previous one.

The concept isn't about predicting the market,  it's about structuring risk differently  .

Let me give you a Numerical Example here :

  • Stage 1: Risk $10 → Target $100
  • Stage 2: Use the $100 profit instead of new capital
  • Stage 3: Risk only part of the previous profit
  • Stage 4: Continue using accumulated profits

The idea is to expose personal capital only at the beginning and let the profits finance the following stages  ..

The challenge, of course, is that this approach still depends on finding high-quality entries

I'm curious to hear your thoughts on this type of money management    .

but you will have also loss not only profit 
 
it is good idea but all in all again will reach about risk reward thinking 
 
Marius Ovidiu Sunzuiana #:
but you will have also loss not only profit 
Correct , the objective isn't to avoid losses, but to limit exposure of personal capital after the first stage
 
Marius Ovidiu Sunzuiana #:
it is good idea but all in all again will reach about risk reward thinking 

Risk/reward is still the foundation , I'm simply exploring a different way to manage the capital behind each stage.

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