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The Way to Trade: Discover Your Successful Trading Personality by John Piper

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Chapter 28: A WAR OF ATTRITION

This section outlines a trading campaign I undertook on the London FTSE options and futures market between 3 April and 16 April 1998. In a period of less than two weeks I notched up a 4 per cent gain on the funds I was trading. My benchmark is to make 4 per cent every month which would mean 60 per cent every year. I consider this a very worthwhile target, over a five-year period 60 per cent per annum would mean an absolute gain of over 900 per cent – see Table 28.1.

When I first did this calculation I thought it must be wrong. How can 60 per cent per annum equal 949 per cent over just five years. But it is true. A 100 per cent gain every year equals 3100 per cent over five years. This is the power of compounding. ...

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