What it is
The compound growth calculator projects how an account balance grows over time when profits are reinvested monthly alongside optional regular deposits.
Why it matters
Compounding is a powerful financial force, but consistent monthly returns are rarely linear in real trading due to market fluctuations.
Why traders use it
Used for long-term planning and goal setting, while keeping expectations grounded in reality.
How important is it?
Demonstrates the power of small, consistent gains over time, but should be viewed as an illustration rather than a guarantee.
Worked example
With defaults: $1,000 starting balance, 5% monthly return over 12 months with $0 monthly deposit, the final balance is $1,795.86, with a total gain of $795.86.
Common mistakes
- Expecting steady, uninterrupted monthly compounding without losing months.
- Assuming past backtested percentages can be sustained indefinitely at large account sizes.
Frequently asked questions
How much does a $1,000 trading account grow at 5% a month for a year?
Reinvesting a steady 5% monthly gain turns $1,000 into $1,795.86 after 12 months (a 79.6% annual return without adding extra deposits).
Are trading returns guaranteed to compound every month?
No. Real trading involves losing months and varying volatility, so use compounding projections as a mathematical benchmark rather than a guaranteed forecast.
Can I include monthly deposits in the compounding calculation?
Yes, enter your recurring monthly contribution in the "Monthly deposit" box to see how deposits and reinvested profits grow together.
Related trading guides
What Is Drawdown and Why Recovery Gets Harder
See how a trading drawdown is measured, why the gain needed to recover grows faster than the loss, and how to limit deep drawdowns.
Risk-Reward Ratio Explained With Examples
Understand the risk-reward ratio, the win rate you need to break even, and why a good ratio alone does not make a good trade.
This page is for education only and is not financial advice. See our disclaimer.