Trading Compound Growth Calculator

How compound growth works

Each period's return is applied to the balance the previous period ended with, so gains earn gains. The closed form is:

Ending balance = starting balance × (1 + return per period) ^ number of periods

A $25,000 account growing 3% a month is not $25,000 plus 36% after a year — it is $35,644, because month twelve earns 3% of eleven months of accumulated gains. Add regular deposits and the curve steepens further, since each deposit compounds for every period that follows it.

What return per period is realistic?

This is where the calculator earns its keep, because it makes optimistic assumptions look ridiculous fast. 10% a month sounds modest in isolation. Run it for three years and a $25,000 account becomes $772,817 — a figure that would put a retail trader among the best performers of all time, sustained without a single losing month.

Professional traders and funds generally target annual returns in the low double digits, with good years well above that and bad years negative. If your assumed monthly return implies a triple-digit annual figure, the honest use of this tool is to lower it until the number stops being a fantasy.

Why variance breaks the smooth curve

Two accounts averaging the same return can end up in very different places. Sequence matters, and drawdowns matter more than gains of equal size: a +50% month followed by a −50% month leaves you down 25%, not flat. The smooth line this calculator draws is the best case a given average return could have produced.

That is the same asymmetry the drawdown recovery calculator puts a number on, and it is the reason protecting the downside does more for a compounding curve than chasing a bigger average.

Common mistakes when projecting growth

• Using a best month as the average. One good month is a sample of one, and compounding it for five years is a way of multiplying luck.
• Ignoring withdrawals. Money taken out stops compounding immediately; a projection that assumes nothing is withdrawn is not describing your account.
• Forgetting taxes and fees. Both are drags applied to the compounding base, so their effect grows with the horizon.
• Mixing period units. A 3% figure means something very different monthly and annually — pick one and stay in it.
• Treating the curve as a target. Missing a projection is not a reason to size up.

Measure the number you are assuming

The input that decides everything here is your average return per period, and most traders are guessing at it. tradempower derives it from your actual closed trades — month by month, against a benchmark — which turns the assumption into a measurement.