Compounding Calculator
See how your trading account can grow with consistent compound gains over time.
Growth Parameters
Understanding Compound Growth
- Compounding means your profits generate more profits over time.
- 5% monthly doesn't equal 60% yearly – it's actually 79.59% due to compounding!
- Be realistic – consistent 5-10% monthly returns are extremely rare.
- Consider drawdowns – use our Drawdown Calculator to see the flip side.
What is a Compounding Calculator?
A compounding calculator demonstrates the power of compound growth in your trading account. Unlike simple interest, compound growth means your profits generate more profits, creating exponential growth over time.
This tool is essential for setting realistic trading goals. While 5% monthly might sound modest, it results in nearly 80% annual returns due to compounding—far exceeding typical investment returns.
Key Features
- Flexible time period options (days/weeks/months/years)
- Regular contribution support
- Compound growth visualization
- Total return calculation
- Starting vs ending balance comparison
- Realistic goal setting
Frequently Asked Questions
Compounding means your gains generate more gains. Earning 5% on $1,000 gives you $1,050. Next month, 5% on $1,050 gives $1,102.50—you earned extra just from previous profits. Over time, this accelerates dramatically.
Consistently achieving 5% monthly is extremely difficult and puts you among the top 1% of traders globally. Most hedge funds target 10-15% annually. Be very cautious of anyone claiming consistent high monthly returns.
It depends on your goals. Full reinvestment maximizes growth but also means risking your profits. Many traders withdraw a portion (e.g., 50% of profits) while reinvesting the rest to balance growth and security.
Drawdowns devastate compounding because you need larger percentage gains to recover. A 20% loss requires a 25% gain to break even. This is why capital preservation and risk management are essential.