If you’re in the 21 to 34 year old age group, you need to see what I have to say because it could mean the difference between financial success in your life, or living your life in regret after not applying the principals I discuss in this video.

Although I'm specifically addressing folks 21 to 34 years old, this information is appropriate for any age group. So, regardless of how old you are, or what your current financial situation is, the information I discuss could have a substantial impact on how you view the opportunities offered in the FOREX foreign currency market.

Of note is that to this post, I have a companion video of the same title: FOREX Advice For 21 to 34 Age Group: Start Now that puts all of this together from a different view point.

If you've come from watching that video, then press on here. However, if this is your starting point, I might suggest that you skip to the bottom of this post to watch that video first.

So, what is it that you're supposed to start now?

Amazingly: it's not trading!

What I'm referring to starting now is to map out a plan for implementing the most powerful tool we, particularly as traders, have: the power of compounding is what you need to start now.

Albert Einstein proclaimed compounding as "... the eighth wonder of the world." That's some pretty heavy advice coming from one of the greatest minds of all time. If you don't want to pay attention to me, you should to him!

You all know what compounding is, and that it's a wonderful thing. Let me pose an example to show you not only how powerful compounding is, but how important it is to start compounding as early as you can.

Let's look at the compounding results of two people over a 45 year period of time.

Compounding Example

Person A invests $4,000 per year on a monthly basis ($333) starting at age 20 and continues to age 40, 20 years so he has put in $80,253.

Person B doesn't begin investing the same way until age 40, the year Person A stops investing. Person B continues to invest until age 65, 25 years, totaling $100,233.

After 45 years averaging 6% per year compounding, Person A will have $783,531 while Person B will have $220,667, $562,864 LESS than Person A.

[*** calculations from U.S. Securities And Exchange Commission web site 'Compound Interest Calculator']

Let me repeat those results so it's really, really clear as to what happened:

Person B will end up with $562,864 LESS than Person A.

Please: go back and re-reread the example: its implications are chilling.

The old cliche "Time is money" is true: time is money.

Respect that, because if you don't: it's to your own financial peril.

The point of the example is to show the power compounding has over just a $333 per month investment at only 6%. At this time in 2021 long term low load ETF and Index funds are averaging 7.96% per year.

What does this have to do with trading?

Well, let's look at what it would take in bank size and pips to create a $400 per month profit.

If you have $10,000 in your account, you can trade 1 full lot at $10 per pip. So, you'd need to make 40 pips net per month to make $400. That's just 10 pips a week. And note here that I don't advocate compounding in trading the way most folks would look at it. This example is just simple returns against a continuing $10,000, 1 lot process.

Of course, if you don't know what you're doing, or you press your luck/skill too hard, you could easily run that account to the wood. You do have to know what you're doing....

The question — if you do know what you're doing — is: where do you come up with $10,000?

Considering that the median single person income today in 2021 for all workers is $41,535 [*** per Census.gov: 'Income and Poverty in the United States: 2020'], it would seem reasonable to assume a $30,000 per year average working person's income. That being the case, then an extra $4,000 a year would represent a huge 13% 'raise' over that $30,000.

Too often, folks get caught up in silly crap; like leasing their car: the average monthly lease payment in the U.S. today is $460 a month on a 36 month contract. [*** per Investopedia: 'How Much Does It Cost to Lease a Car?'] For a depreciating asset.

I've gone over all of this many times in previous blog posts and videos. There's no need to beat it to death. You get it.

The point to be made here is that though the trading example represents simple returns, once you get to a point where you understand the correct application of compounding, that will just be an accelerent to the results you'll be able to obtain from your trading efforts.

The key to all of this is to understand compounding, and to start as soon as possible on a viable trading plan so that you'll have the time to build massive results from literally small efforts repeated many times over the long run.

Video: FOREX Advice For 21 to 34 Age Group: Start Now