Here you have a more detailed and simplified explanation of the article to make it easy to understand:
The article talks about how to turn 50 dollars into 5000 dollars using an investment strategy based on compound interest and cryptocurrency trading, following lessons from the book 'The Psychology of Money' by Morgan Housel.
What is compound interest?
Compound interest is when the profits you earn are reinvested to generate even more profits. It's like a snowball that grows faster and faster.
Example: You invest 100 dollars, you earn 3%, now you have 103 dollars, and the next day you earn interest not only on 100 but also on those 3 additional dollars.
The proposed strategy
Initial capital: 50 dollars
Goal: To reach approximately 5000 dollars
How: By making daily trades with a profit rate of 3% each day.
Stop Loss: If the trade loses more than 3%, exit to minimize losses.
Only one coin: To simplify management and avoid too much diversification.
Duration: A maximum of 48 hours per trade: if it does not reach the 3% target, the trade is closed.
Total Duration: 300 days, with approximately 156 trades.
Estimated success: 50% winning trades and 50% losing trades, which will still lead to the goal thanks to compound interest.
How to choose the right coin
Use tools like the Coinglass platform and Binance.
Observe the coins with losses between 8% and 10% for the day (potential to recover).
See which coins are 'being pumped' (rising quickly) and bet on them following the strategy.
Keys to success
Discipline and commitment: Strictly follow the rule of closing trades if a 3% profit or 3% stop loss is reached.
Do not leave open trades for more than 48 hours.
Maintain consistency even with losses.
Why does it work?
Compound interest multiplies accumulated gains. Even with losses, with discipline and a positive profit ratio, exponential growth can be achieved.