The Compounding Calculator shows how your trading account grows when you reinvest profits instead of withdrawing them. This is the most powerful wealth-building tool in trading.

What You'll Need

Starting balance
Monthly return % (realistic ROI)
Time period (months or years)
Optional: Monthly deposits

Step-by-Step Instructions

1Enter Starting Balance

Your current account size.

Example: 5000 ($5,000)

2Enter Monthly Return %

What's your REALISTIC average monthly profit %? Use data from your trading journal.

Conservative: 3% per month
Moderate: 5% per month
Aggressive: 10% per month

⚠️ Be Realistic: Professional traders average 3-10% monthly. Don't enter 20-30% unless you have verified track record.

3Enter Time Period

How many months do you want to project?

Examples:
• 6 months: 6
• 1 year: 12
• 2 years: 24
• 5 years: 60

4(Optional) Add Monthly Deposits

Will you add money from your job each month?

Example: 500 (adding $500/month from salary)

5Review Growth Projection

The calculator shows:

Final balance after X months
Total profit from trading
Total deposits contributed
Month-by-month breakdown
Growth chart (visual)

The Power of Compounding: Real Examples

Example 1: Pure Compounding (No Withdrawals)

Starting Balance: $10,000
Monthly Return: 5%
Time Period: 24 months (2 years)
Monthly Deposits: $0

Results:
Month 1: $10,500
Month 6: $13,401
Month 12: $17,959
Month 24: $32,251

Total Profit: $22,251 (222% gain)
You turned $10k into $32k by just leaving it alone!

Example 2: With Monthly Contributions

Starting Balance: $5,000
Monthly Return: 3%
Time Period: 12 months (1 year)
Monthly Deposits: $500

Results:
Month 1: $5,650 ($5,000 × 1.03 + $500)
Month 6: $9,284
Month 12: $13,796

Total Profit from Trading: $2,796
Total Deposits: $6,000
Final Balance: $13,796
Combining trading + deposits = accelerated growth!

Example 3: Conservative Long-Term Growth

Starting Balance: $25,000
Monthly Return: 4%
Time Period: 60 months (5 years)
Monthly Deposits: $0

Results:
Year 1: $45,077
Year 2: $81,308
Year 3: $146,670
Year 4: $264,524
Year 5: $477,110

You turned $25k into nearly half a million in 5 years!

Compounding vs Withdrawing: The Difference

Month	Compounding (0% Withdrawal)	Withdrawing 50% Profit	Withdrawing 100% Profit
Start	$10,000	$10,000	$10,000
Month 6	$13,401	$11,576	$10,000
Month 12	$17,959	$13,382	$10,000
Month 24	$32,251	$17,908	$10,000

Assumes 5% monthly return, compounding reinvests all profits.

💡 Key Takeaway: Full compounding (0% withdrawal) turns $10k into $32k. Withdrawing all profit keeps you at $10k forever. Massive difference!

Realistic vs Unrealistic Returns

Monthly Return	Yearly Return	Realistic?	Risk Level
1-2%	12-27%	✅ Very Conservative	Low
3-5%	43-80%	✅ Realistic	Medium
6-10%	101-214%	⚠️ Aggressive	High
15-20%	435-792%	❌ Very Risky	Extreme
25%+	1,355%+	❌ Unsustainable	Gambling

⚠️ Reality Check: Warren Buffett averaged 20% YEARLY (not monthly). If someone promises 20%+ monthly consistently, it's likely a scam.

Common Mistakes

❌ Mistake #1: Using Peak Performance Returns

Don't use your best month (15% return) as your input. Use your AVERAGE over 6-12 months. Include losing months!

❌ Mistake #2: Ignoring Drawdowns

Calculator assumes steady growth. Real trading has 20-40% drawdowns. Budget for setbacks.

❌ Mistake #3: Increasing Risk to Hit Projections

If account isn't growing as projected, don't increase risk from 1% to 5% to "catch up." You'll blow the account.

❌ Mistake #4: Forgetting About Taxes

If you withdraw profits, you owe taxes. Set aside 20-30% for tax obligations.

Compounding Strategies

Strategy 1: Full Compounding Until Goal

Reinvest 100% of profits until account reaches your target size (e.g., $100k), then switch to withdrawing.

Best for: Small accounts ($1k-$25k) trying to reach critical mass for full-time income.

Strategy 2: 70/30 Split

Compound 70% of profits, withdraw 30% for living expenses or safety fund.

Best for: Medium accounts ($25k-$100k) balancing growth with income needs.

Strategy 3: Withdrawal Above Threshold

Compound until account hits $X, then withdraw everything above that amount.

Example: Threshold = $50k
Month end balance = $58k
Withdraw $8k, keep $50k for next month

Strategy 4: Milestone Withdrawals

Withdraw only when account doubles, triples, etc.

Best for: Large accounts ($100k+) focused on wealth preservation with occasional rewards.

Pro Tips

💡 Tip #1: Run 3 scenarios - Conservative (3%), Base (5%), Optimistic (8%). Plan for conservative, celebrate if you hit optimistic.

💡 Tip #2: First 12 months: Compound 100%. After proving consistency, start withdrawing a %.

💡 Tip #3: Use monthly deposits feature if you have a job. Even $200/month accelerates growth significantly.

💡 Tip #4: Screenshot projections and track actual results. Adjust monthly return % quarterly based on real performance.

The Math Behind Compounding

Formula:

Future Value = Starting Balance × (1 + Monthly Return)^Months

Example:
Starting Balance = $10,000
Monthly Return = 5% (0.05)
Months = 12

FV = $10,000 × (1 + 0.05)^12
FV = $10,000 × 1.7959
FV = $17,959

FAQ

Q: Is 10% monthly return realistic?

A: For experienced traders with proven strategies, yes - but with high risk. Most professionals target 3-7% monthly.

Q: Should I compound or withdraw profits?

A: Compound until account is large enough to generate needed income at lower risk. Then withdraw a %.

Q: How long to turn $5k into $100k?

A: At 5% monthly, about 35 months (3 years). At 3% monthly, about 60 months (5 years).

Q: Can I lose money even with positive monthly returns?

A: Yes, if you withdraw more than you earn. Stick to your plan!

Q: What's the minimum account size to start compounding?

A: Any size works! Even $500 compounds. But larger accounts ($5k+) show more dramatic growth.

Open Compounding Calculator →