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Compounding calculator
What a steady return does to a balance over time. Set a starting balance, a return per period and the number of periods; add regular deposits if you want, and see the curve, the total profit and the annualised rate.
Fill in the form to see the result.
Educational arithmetic on the figures you enter. Example prices are placeholders, not live quotes; contract sizes and pip definitions vary by broker. Not financial advice.
How it works
Compounding reinvests each period's gain, so the next gain is calculated on a larger balance:
The chart shows the balance path and the table lists each period's gain. The "same return, no compounding" line shows what fixed lot sizes would earn instead, which is the honest comparison: compounding only beats it if you actually scale your size with the balance.
Withdrawals and lot size
Two optional blocks make the curve match how an account is really run. Take profits out either withdraws a share of every period's profit, or waits for a milestone: each time the balance is a set percentage above the level of the last withdrawal, it takes a share of that gain and resets the level. Both show the money taken out alongside the balance, so you see the total of the two rather than a balance that looks smaller than the result.
Show the lot size per period turns the balance into the size it supports: pick the instrument, the risk percentage and the stop in pips, and each row carries the lot that period would trade, rounded down to 0.01. That is the honest version of compounding — the gain only grows if the size grows with the balance.
Realistic inputs
1% a day compounds to about 1,100% a year, 5% a month to about 80%. Numbers like these are useful to understand the maths, not to plan an income. The calculator flags inputs above 1% per day or 15% per month; a losing month resets the curve, which the drawdown table quantifies.
Worked example: gold
$1,000 at 5% per month for 12 months, no deposits:
At 3% per month the same year ends at $1,425.76; at 10% per month at $3,138.43. Adding $100 every month at 5% turns the $1,000 into $3,387.57, of which $1,200 is deposits and $1,187.57 profit.
Now the other side: one −20% month inside that year needs +25% to get back. Two of them and the 5% months barely cover the damage. Compounding is as fast on the way down as on the way up.
FAQ
Questions traders ask
Is 1% a day realistic in trading?
Sustained, no. 1% every trading day compounds to roughly 1,100% a year, far beyond what professional funds achieve, and it ignores losing days entirely. The calculator will show the figure because the maths is simple, and it flags it as unrealistic. A more useful exercise is to enter your journal's real average monthly return, including losing months, and see where that leads.
What is a realistic monthly return for a retail trader?
Consistent traders talk about low single digits per month with drawdowns along the way, and many months are flat or negative. Professional fund returns of 15-30% a year are considered strong. Use the calculator with a range of figures, 1% to 5% a month, and treat anything higher as a stress test rather than a plan.
What is the difference between compounding and fixed lot size?
With a fixed lot size your gain per period stays the same in money, so growth is a straight line. With compounding you scale the lot size with the balance (for example a fixed 1% risk per trade), so the gain grows with the account. The result line labelled "same return, no compounding" shows the straight-line figure for comparison.
Can I model withdrawals?
Three ways. A negative deposit takes a fixed amount out every period. "% of each profit" takes a share of each winning period and compounds the rest, which is how most traders pay themselves. "At milestones" waits until the balance is a set percentage above the level of the last withdrawal, takes a share of that gain and resets the level, which suits a plan like "every time I am 50% up, I take half of it off the table". The result shows the balance, the total withdrawn and the two added together.
Does it show the lot size for each period?
Yes, switch on "Show the lot size per period" and pick the instrument, the risk percentage and the stop in pips. Each row then shows the lot that period's balance supports at that risk, rounded down to 0.01, which is the same calculation as the position size calculator. It is useful for seeing when an account is big enough to move from 0.01 to 0.02 lots, and how long a small account sits at the minimum size.
Does compounding work with losing periods?
It works the same way in reverse, which is the point people miss. A −10% period reduces the base for every period after it, and it takes +11.1% to recover; −20% takes +25%. Enter a negative return to see the curve fall, and use the risk/reward calculator's recovery table to size trades so a bad run stays recoverable.
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Every member gets a free trading journal: log the size you just calculated, the stop, the target and the outcome, then review by week and by setup.