diff --git a/source/glossary.rst b/source/glossary.rst index 9f7ae06..981c286 100644 --- a/source/glossary.rst +++ b/source/glossary.rst @@ -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` @@ -2361,13 +2363,24 @@ and algorithmic trading. 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 ` 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`