Compound Growth Calculator

Genuinely consistent monthly returns are uncommon in practice, since trading performance naturally varies month to month treat compounding calculators as illustrative rather than realistic forecasts. Real results include winning months, losing months, and everything in between, even for a strategy with a genuinely positive long-run edge, so a smooth compounding projection should be understood as a simplified reference point rather than a promise of what any specific stretch of months will actually look like.

Yes, losses compound on a shrinking balance too, which is part of why recovering from a drawdown requires a proportionally larger percentage gain than the original loss. A 20% loss followed by a 20% gain doesn't return you to breakeven, since the gain is calculated on the smaller post-loss balance this asymmetry is exactly the same mathematical principle that makes positive compounding so powerful in the growth direction, just working against you instead.

That's a personal decision some traders choose to withdraw a portion of profits regularly for living expenses or tax obligations, which naturally slows compounding compared to full reinvestment. There's no universally correct answer here, since it depends on why you're trading in the first place full reinvestment maximises long-run theoretical growth, while regular withdrawals provide real-world financial benefit sooner, at the cost of a smaller compounding base going forward.

A compound growth calculator projects a single assumed fixed return forward, while a profit path calculator typically maps a broader range of monthly outcomes toward a specific account goal, often building the projection from win rate and risk-reward ratio rather than a single blanket growth-rate assumption. Both are useful for different purposes this calculator is better suited to clean, comparable rate-based projections, while a profit path approach more closely mirrors how trade-by-trade performance actually accumulates.

CAGR, or compound annual growth rate, represents the single steady annual rate that would take an investment from its beginning value to its ending value over a given period, accounting properly for compounding along the way. A simple average return instead just adds up each period's percentage return and divides by the number of periods, which can be meaningfully misleading when returns are volatile and the underlying risk-reward ratio isn't accounted for, since it doesn't account for the fact that a loss and an equal-sized subsequent gain don't cancel out on a compounding basis a 50% loss followed by a 50% gain leaves you down 25% overall, not back to breakeven, despite the arithmetic average of the two returns being exactly zero. CAGR corrects for this by working backward from actual beginning and ending values, which makes it a more honest measure of true compounded growth than a simple average of period returns.

The issue is that compounding accelerates dramatically over time even at a rate that sounds modest on a monthly basis. A 10% monthly return compounds to roughly 214% over a single year, and over five years, the same rate would in theory turn a starting account into a sum thousands of times larger than the initial deposit an outcome that essentially no trading edge has ever sustained over a meaningful length of time, and which quickly reveals the assumption as unrealistic once projected forward far enough. This is exactly why compounding calculators are useful specifically for stress-testing assumptions: an input that seems entirely reasonable as a single monthly figure can produce an obviously absurd result once compounded over a longer projection, which is a strong signal that the assumed rate itself needs revisiting rather than treating the output as a genuine forecast.

More frequent compounding at the same nominal annual rate produces a slightly higher effective return than less frequent compounding, since interest or gains are added to the base more often, and each addition itself then starts earning further returns sooner. The difference between annual and monthly compounding at typical trading return assumptions is usually modest compared to the difference that a change in the underlying rate assumption itself produces, so while compounding frequency is worth understanding conceptually, it's rarely the most important lever to focus on when evaluating a growth projection the assumed rate of return matters considerably more than how often it's technically compounded.

Yes if the ending value is lower than the beginning value over the period measured, the CAGR calculation produces a negative percentage, correctly reflecting that the investment or account shrank on average over that period despite any compounding effects. A negative CAGR is mathematically well-defined and calculated the same way as a positive one; there's nothing unusual about the formula in this case, it simply reflects an overall decline, and can be useful for understanding the average annual rate of decline during a genuinely difficult period, in the same way a positive CAGR describes an average annual rate of growth during a good one.

CAGR is a reasonable common yardstick for this kind of comparison, since it's the standard way long-term investment returns are typically expressed and compared across very different asset classes and strategies. That said, a fair comparison needs to account for the fact that trading and passive index investing carry very different risk profiles, time commitments, and volatility along the way to reaching a given CAGR two approaches producing an identical CAGR over the same period can have taken very different, and not equally comfortable, paths to get there. It's worth looking at maximum drawdown alongside CAGR for both approaches being compared, rather than judging purely on the headline growth rate, since a strategy that achieves a similar CAGR with meaningfully smaller drawdowns along the way represents a genuinely different, and arguably more attractive, risk-adjusted outcome even at the same average growth rate.

Markets don't move in the smooth, predictable way that a compounding projection assumes real trading returns come from a sequence of individual trades with genuine variance, meaning some months will be considerably better than a strategy's long-run average and others considerably worse, sometimes negative, purely from ordinary statistical fluctuation even with no change in underlying edge. Sustaining a high monthly return consistently would require either an extraordinarily large and reliable statistical edge, which is exceptionally rare and difficult to maintain as market conditions evolve, or scaling position size up dramatically after good months, which mathematically increases the risk of a severe drawdown during an inevitable bad stretch. There's also a practical capital constraint that many projections ignore: as an account grows large enough, the same percentage return requires deploying proportionally more capital into the market, and at some point, doing so without moving prices against yourself, or without exceeding what a given strategy's edge can actually support at scale, becomes genuinely difficult regardless of how well the strategy worked at smaller size. Historical evidence reinforces this scepticism too even the most celebrated professional fund managers, with vastly more resources and research capacity than an individual retail trader, rarely sustain annualised returns much above 20-30% over long periods, which puts many casually quoted monthly trading return claims into useful perspective. This combination of statistical variance, the difficulty of scaling an edge without diluting it, and the psychological pressure to maintain an unsustainable pace once it's been achieved even briefly, is why virtually every genuinely high, consistent return figure quoted for any extended period should be treated with real scepticism rather than taken as an achievable target. Compounding calculators are valuable precisely because they make the long-run absurdity of an unrealistic monthly assumption mathematically explicit rather than leaving it as a vague feeling. See Can I Make a Living Trading Forex Full-Time? for a grounded look at what sustainable outcomes tend to actually look like.

Start by using the Required CAGR mode above with your actual current balance, a genuinely considered target balance, and your intended time horizon to see what annual growth rate that goal implies. The most useful part of this exercise isn't the calculation itself, but what you do with the resulting number compare it honestly against CAGR figures that are actually achievable in practice, whether that's a realistic estimate of your own trading strategy's genuine long-run performance from a meaningful sample of logged trades, or general benchmarks like long-term equity market returns, which historically sit in a much lower range than many traders initially assume trading should produce. If the required CAGR for your goal comes out dramatically higher than anything realistically sustainable, that's valuable information delivered early, rather than discovered after years of chasing an unrealistic target at that point, the goal itself, the timeline, or the required starting capital likely need adjusting, rather than assuming the required return rate is simply a matter of trying harder or finding a better strategy. It's often more productive to work the problem from multiple angles simultaneously checking what happens to the required CAGR if you extend the timeline by a couple of years, or if you add a modest regular contribution alongside trading returns since these adjustable levers are usually easier to change than a trading strategy's fundamental edge. Revisiting this calculation periodically as your actual trading track record develops, replacing assumed figures with real, logged performance data, turns it from a one-time thought experiment into an ongoing, increasingly accurate planning tool. See How Do I Set Realistic Monthly Profit Targets? for a complementary, shorter-term version of this same planning exercise.

Total return describes the complete percentage change in value from the beginning to the end of a period, with no reference to how long that period took a total return of 100% over one year and a total return of 100% over ten years are very different outcomes, even though the headline percentage figure is identical. CAGR corrects for exactly this by converting total return into an annualised, per-year rate, which makes it possible to fairly compare growth achieved over different time periods on a like-for-like basis a CAGR of 15% is directly comparable whether it was calculated over 3 years or 15, in a way that raw total return figures aren't. Total return is more useful when you specifically care about the complete outcome over a fixed, already-known period, such as summarising exactly how a specific investment or account performed from start to finish. CAGR is more useful when comparing growth rates across different time horizons or when projecting forward, since it isolates the annual rate itself rather than conflating rate and time period into a single number. Many financial summaries report both figures together for exactly this reason total return for the complete picture, and CAGR for a rate that can be meaningfully compared elsewhere. See What Is the Difference Between Net Profit and Gross Profit in Trading? for a related distinction worth understanding when evaluating trading results.

It's a useful planning tool, but real trading returns are rarely perfectly consistent month to month, actual results include drawdowns and variable performance, this calculator shows the mathematical ideal, not a guaranteed outcome.

A significant amount, due to the mathematics of compounding, even small consistent monthly returns accumulate substantially over years, which is why consistency, not just occasional large wins, is so heavily emphasised in trading education.

This calculator assumes no withdrawals, if you plan to regularly withdraw profits, your actual account growth trajectory will be meaningfully slower than the pure compounding figure shown here.

This varies enormously by strategy and skill level, conservative, sustainable figures are typically in the low single digits monthly, be genuinely skeptical of any strategy claiming to consistently produce double-digit monthly returns.

No, this calculator models pure positive compounding, a strategy with variable returns, including losing months, compounds differently and generally less favourably than a strategy with the same average return but perfect consistency.