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miohtama committed Mar 15, 2024
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Expand Up @@ -2290,6 +2290,8 @@ and algorithmic trading.

To calculate cumulative profit, one must add together all net profit numbers over a specific time frame.

If a trading strategy automatically reinvests its profits to itself, it is called :term:`auto-compounding`.

See also

- :term:`Compound`
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Auto-compounding

Auto-compounding is an investment strategy in which the user's investment yields are automatically reinvested into the investment principal at regular intervals.
Auto-compounding is a :term:`trading strategy` in which the investors's investment yields are automatically reinvested into the investment principal at regular intervals.

Auto-compounding strategies are :term:`benchmarked <benchmark>` using metrics having compounding factored in

- :term:`Compound Annual Growth Rate (CAGR)`

- :term:`Annual Percentage Yield (APY)`

Compounding is a powerful investing concept that involves earning returns on both the original investment and on returns received previously.
It is considered one of the smartest investment strategies, as it can generate additional earnings over time.

See also

- :term:`Cumulative profit`

- :term:`Compound Annual Growth Rate (CAGR)`

- :term:`Annual Percentage Yield (APY)`

- :term:`Trading strategy`

- :term:`Risk-adjusted return`
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