Bringing Linear and Exponential Growth to Crypto Currency. Part II.

Hey dear readers I have here the continuation of our topic from my previous article which was the part I. If you haven't read it yet, I advice you to read it first before jumping in here so you can actually find the difference in between the two growth rate. You can click my name and check on my articles or you can simply click here to redirect you on my post!

In continuation....

Last time we talk about linear growth in which the increase of a number has an equally distributed amount. In which the main thought was, n1 = x+xr : n2= n1 + xr using recursive formula and nn = x + xrn using explicit forms. Today we are going deeper with exponential growth. So lets rock on..

Disclaimer

I am not expert on Math nor expert in words. I just love it. If anything I have written here is wrong you can comment down below and we can discuss it.

Objective

This will mainly focus on the differences of of linear growth vs exponential growth and how we can apply it to consistent less risk trading.

Exponential growth

10^2 rang a bell?

Exponential comes from the word exponent with a symbol of (^) where we can double a number or triple and so on by raising it by 2 or 3 or so on respectively. Same way with linear growth, exponential growth is a number of x growing at a given unit of y but with a little mix because unlike linear that grows with the same amount every yields, exponential growth yields "exponentially" at every unit of y. That makes it more appealing than linear. In a sense like on gambling you bet only the initial take out the profit. While in exponential bet the initial then add the profit again in the next bet. Same way with trading and compounding.

Arriving with a formula of using recursive

N1= X + Xr factoring this algebraic form out we will have

N1 = X (1+r) eq.1 where,

N1 = the value of the first growth : X = Initial value : R = Rate of growth increase

N2 = N1+ N1r = N1(1+r) substituting the eq.1 we will arrived with,

N2= X(1+r)(1+r) = X(1+r)^2 eq.2

Simplifying this in explicit format,

Nn = X ( 1 + r ) ^ n eq.3

Where

Nn = present value where is the value you were looking for at nth time,

n = is the time for example at 5th trade at 5th year or

Let me elaborate more with samples. Of course disregarding all the fees again.

Sample problem using the previous problem so we can easily spot the difference.

1. Ana started trading at 0.5 bitcoin cash, every trade she wants to earn 10% of her started amount supposed she was now on her 5th trade how many bitcoin cash she has now if she only use 0.5bitcoin cash every trade.

   Using recursive formula

   N1 = 0.5 (1+0.1) = 0.55

   N2 =0.55(1+0.1) = 0.65

   N3 = 0.65(1+0.1) = 0.665

   N4 = 0.665(1+.01) =0.73205

   N5=0.7325(1+0.01)=0.80525

   Simply using Explicit formula

   N5=0.5(1+0.1)^5=0.80525

If we are going to look back at the linear growth exponential has made a larger profit if Ana has successfully executed 5 consecutive trades of having an increase growth rate of 10%. Let us look at linear growth and compare,

If we look at the photo above and the solution, comparing them both, Ana using linear growth taking aside her profit while trading, will have her initial investment and profit at the end of her 5th trade to 0.75bitcoincash. While if Ana uses her profit same with her investment for her following trades, Ana would get 0.80525 bitcoin cash at the end of her 5th trade.

We can see that the difference between the two trades is almost 0.05 bch and if we look it out Ana almost reach the 0.75bch at her fourth trade! Isn't that amazing? One thing that is good about exponential growth it is similar to compounding or it is more likely a compounding.

It is good to know and learn trading because it really pays off your effort by studying. Most banks like in the Philippines does not offer a huge growth of interest. So if we really want to make our money grow we have to study more. Meaning we also needs to grow!

We should study now so we're ready for the future!

Moreover, if you have come to this far, I have a mini quiz for you if you really read my article and understand it.

Mini quiz For $1.00

1. Meyzee is a club1BCH member, she have earned around 0.25 bch from readcash and since she wants her bch to increase, she expand her knowledge and study spot trading, if she is trading between $500-$550 per bch, how many successful trading she needs to have the 1bch if she uses

   a. 0.5$ using linear growth (1st one who got it correct) 0.05$ for the ff next

   B. 0.5$ using exponential growth

Closing thoughts

In crypto everything is science, Math, analysis and such term, and I am still amazed how everything grows from different pattern. I hope you like what I have written and I hope to see you in my comment section! Thank you!