Results 1 to 5 of 5
  1. #1
    Star Lounger
    Join Date
    Feb 2003
    Posts
    95
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Compounding for each day I hold a stock position (2002 SP-2)

    For my stock trades, I wish to calculate what percentage profit target I should set if I want an n% compounded return with the position held for x number of days. For example, if I buy a stock and hold it for 5 days and I wanted a *simple* return equal to 1% for each day I hold the position, then I would sell it at a 5% profit (e.g. if I bought at 100, I would sell at 105); if I held it for 10 days and wanted a 1.5% return for each day, I would sell it at 15% profit (i.e. 115), etc. However, instead of simple returns, I want COMPOUNDED returns (with compounding occurring daily). Thus, in the example above, if I held a stock position for 10 days, and I wanted a compounded rate of return of 1% for each day I held the stock, how much should I sell it for? And what if I wanted a 1.5% compounded daily return, and so on? Please post the formula in a generic format using n for % and x for number of days; I will then modify it depending on my own parameters. Thanks in advance!

  2. #2
    Uranium Lounger
    Join Date
    Dec 2000
    Location
    Salt Lake City, Utah, USA
    Posts
    9,508
    Thanks
    0
    Thanked 6 Times in 6 Posts

    Re: Compounding for each day I hold a stock position (2002 SP-2)

    Assuming the interest rate is also daily:

    =Price*(1+Rate)^Days_Held
    -John ... I float in liquid gardens
    UTC -7ąDS

  3. #3
    Star Lounger
    Join Date
    Feb 2003
    Posts
    95
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Re: Compounding for each day I hold a stock position (2002 SP-2)

    Is the "interest rate" (i.e. my desired rate of return) to be written as a percentage (e.g. 0.02 for 2%) or as the full number (e.g. 2 for 2%). And what does the ^ sign mean - I don't think it means multiplication; is it "raised to the power of"? I hope you pardon my ignorance.

  4. #4
    Uranium Lounger
    Join Date
    Dec 2000
    Location
    Salt Lake City, Utah, USA
    Posts
    9,508
    Thanks
    0
    Thanked 6 Times in 6 Posts

    Re: Compounding for each day I hold a stock position (2002 SP-2)

    It can either be written as 2.0% or 0.02, so long as it is evaluated as a decimal number. The number 2 is the same as 200.0% - which would be a nice compounding target. "^" indeed means "to the power of".
    -John ... I float in liquid gardens
    UTC -7ąDS

  5. #5
    Star Lounger
    Join Date
    Feb 2003
    Posts
    95
    Thanks
    0
    Thanked 0 Times in 0 Posts

    Re: Compounding for each day I hold a stock position (2002 SP-2)

    Since I am only looking for the multiplier, I changed the formula to "((1+Rate)^Days_Held) -1" and created a sheet with different values for Rate and Days_Held. As far as I can tell, it looks OK but if I have botched up somewhere, do let me know!

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •