MathsFormula
Junior Member
- Joined
- Jul 13, 2014
- Messages
- 95
Hi
I started a demo account on stock market investing firm. Some of the claims of returns that traders make are astronomical.
I invested £4000 (fake money) and made £25 profit.
Can you check my calculations please:
1. So return on investment (ROI) is 0.625% Calculation = (25x100)/4000
2. If I do the same every day for 260 days per year (not compounding the profit) that gives ROI of 162.5% [£25 x 260] = £6500 profit
Money in account = £10,500
That's amazing given that a typical UK high street bank offers say 4% AER (annual equivalent rate)
3. If the £25 daily ROI is reinvested (compounded) the total in account = £ 26,903.48 (profit is £22,903.48)
A=4000(1+0.00625)^260 This is the calculation from internet
4. If I compound for 2600 days he profit would be $56,458,735.60
This is unbelievable. AS IN I DON'T BELIEVE IT CAN HAPPEN. But the maths is correct above????
__________________
5. So maybe the ROI on my first day was a fluke and instead I only make ROI 0.1% daily, that 26% after 260 days
Still much more than a bank. If I compound my winnings for 2600 days, that makes £ 48,729.96 in account
I'm trying to persuade a friend to join me in the trading journey but he's convinced my maths is wrong. Please advise
I started a demo account on stock market investing firm. Some of the claims of returns that traders make are astronomical.
I invested £4000 (fake money) and made £25 profit.
Can you check my calculations please:
1. So return on investment (ROI) is 0.625% Calculation = (25x100)/4000
2. If I do the same every day for 260 days per year (not compounding the profit) that gives ROI of 162.5% [£25 x 260] = £6500 profit
Money in account = £10,500
That's amazing given that a typical UK high street bank offers say 4% AER (annual equivalent rate)
3. If the £25 daily ROI is reinvested (compounded) the total in account = £ 26,903.48 (profit is £22,903.48)
A=4000(1+0.00625)^260 This is the calculation from internet
4. If I compound for 2600 days he profit would be $56,458,735.60
This is unbelievable. AS IN I DON'T BELIEVE IT CAN HAPPEN. But the maths is correct above????
__________________
5. So maybe the ROI on my first day was a fluke and instead I only make ROI 0.1% daily, that 26% after 260 days
Still much more than a bank. If I compound my winnings for 2600 days, that makes £ 48,729.96 in account
I'm trying to persuade a friend to join me in the trading journey but he's convinced my maths is wrong. Please advise