Compounding Calculator
Visualise how compound growth builds your trading account over time.
| Month | Gain | Balance |
|---|---|---|
| 1 | +$500.00 | $10,500 |
| 2 | +$525.00 | $11,025 |
| 3 | +$551.25 | $11,576.25 |
| 4 | +$578.81 | $12,155.06 |
| 5 | +$607.75 | $12,762.82 |
| 6 | +$638.14 | $13,400.96 |
| 7 | +$670.05 | $14,071 |
| 8 | +$703.55 | $14,774.55 |
| 9 | +$738.73 | $15,513.28 |
| 10 | +$775.66 | $16,288.95 |
| 11 | +$814.45 | $17,103.39 |
| 12 | +$855.17 | $17,958.56 |
The Power of Compounding in Trading
Compound growth means your gains earn gains. If you make 5% per month consistently, a $10,000 account becomes $17,959 after 12 months — not $16,000 (which is what simple interest would give you).
The key is consistency and discipline. Even small, steady gains compound dramatically over time. This calculator helps you set realistic expectations for your trading growth.
Common questions
How does compounding work on a trading account?
Each period's gain is calculated on the balance the previous period ended with, so profits earn profits. 5% a month is not 60% a year — it is 79.6%, because the base grows each month.
Is 10% a month realistic?
Sustained, no. 10% a month compounds to roughly 214% a year, which would make a $10,000 account worth over $3m in five years. Returns of that order appear in marketing material and in short lucky runs, not in long track records. The strategies documented on this site that survive honest cost modelling land in the single digits to low double digits annually.
Why do compounding projections mislead?
Because they assume a constant positive return and no drawdown. Real equity curves have losing months, and a single bad one resets the compounding base. A projection is an upper bound under assumptions that never hold, not a forecast.
Should I compound position size as the account grows?
Percentage-based sizing does this automatically, which is why it is the default in most risk frameworks. The trade-off is that it also compounds losses downward, shrinking position size exactly when you are trying to recover.
Where we use this
Compounding assumptions make or break published returns. Ours are tested on real tick data, net of costs.
We test strategies the hard way and publish every result. Get an email when one passes our gates.