Example 1 — 5% for 12 periods
- Starting balance
- 1,000.00 USD
- Periods
- 12
- Gain per period
- 5%
Ending balance = 1,000.00 × (1 + 0.05)^12 ≈ $1,795.86, a 79.59% total gain. The same 12 periods without compounding would return only 60.00%.
Compounding Calculator
A steady gain every period, reinvested each time, is a planning assumption you enter into this tool, not something the market owes you. See what that assumption does to an account, in USD and Thai baht (THB).
- Free
- No data stored
- Formula shown
Ending balance after 12 periods
1,795.86USD
≈ 58,652.67 THB
- Total profit (USD)
- 795.86
- Total profit (THB)
- 25,992.67
- Total gain (%)
- 79.59
- Same periods without compounding (%)
- 60.00
| Period | Starting balance | Ending balance | Total profit | Total gain (%) |
|---|---|---|---|---|
| 1 | 1,000.00 | 1,050.00 | 50.00 | 5.00 |
| 2 | 1,050.00 | 1,102.50 | 102.50 | 10.25 |
| 3 | 1,102.50 | 1,157.63 | 157.63 | 15.76 |
| 4 | 1,157.63 | 1,215.51 | 215.51 | 21.55 |
| 5 | 1,215.51 | 1,276.28 | 276.28 | 27.63 |
| 6 | 1,276.28 | 1,340.10 | 340.10 | 34.01 |
| 7 | 1,340.10 | 1,407.10 | 407.10 | 40.71 |
| 8 | 1,407.10 | 1,477.46 | 477.46 | 47.75 |
| 9 | 1,477.46 | 1,551.33 | 551.33 | 55.13 |
| 10 | 1,551.33 | 1,628.89 | 628.89 | 62.89 |
| 11 | 1,628.89 | 1,710.34 | 710.34 | 71.03 |
| 12 | 1,710.34 | 1,795.86 | 795.86 | 79.59 |
Worked examples
Try it with real numbers
Example 2 — 2% for 6 periods
- Starting balance
- 10,000.00 USD
- Periods
- 6
- Gain per period
- 2%
Ending balance = 10,000.00 × (1 + 0.02)^6 ≈ $11,261.62, a 12.62% total gain versus 12.00% without compounding.
The formula
How to calculate compounding
Ending balance after n periods = starting balance × (1 + gain per period ÷ 100)^n
Total profit = ending balance − starting balance
Without compounding, the same n periods would return n × gain per period
Total profit = ending balance − starting balance
Without compounding, the same n periods would return n × gain per period
What each variable means:
- Starting balance — The account balance before the run of gains begins.
- n — The number of periods entered, where every period's gain is added to the balance before the next period is calculated.
- Gain per period — The percentage return each period produces, applied to the balance as it stood at the start of that period.
- Without compounding — A reference figure showing what a flat, non-reinvested return of the same size would add up to over the same number of periods.
Because each period's gain is calculated on a growing balance, the dollar profit accelerates even while the percentage per period stays fixed. That gap between the compounded total and the simple total is the entire point of reinvesting gains, and it's also why the assumption behind it needs to be realistic.
What is compounding
Compounding means each period's profit is added to the balance and put back to work, so the next period's gain is calculated on a larger base than before. Over enough periods, the growth curve bends upward faster than a flat, non-reinvested return of the same size. This tool shows exactly how much faster, period by period.
Why a steady gain per period is an assumption
Trading results are not a fixed percentage on a schedule. A strategy that averages 5% might return 15% in one period and lose 8% in the next, and the order those returns arrive in changes the ending balance even when the average stays the same. Treat the gain per period entered here as a planning input you're testing, not a return any market or strategy has promised to deliver.
How this differs from a drawdown
This tool is the mirror image of the Drawdown Calculator, which runs the same math backward through a string of losses instead of gains. Reading both together is useful: the drawdown tool shows how fast a losing streak erodes a balance, and this one shows how fast a winning streak could rebuild or grow it, so you can weigh the two against each other before you commit to a plan.
FAQ
Frequently asked questions
Why is the compounded total higher than periods times the gain per period
Multiplying periods by the gain per period only tells you the simple, non-reinvested total. Compounding calculates each period's gain on the balance already grown by every prior period, so the profit builds on itself and pulls ahead of the simple total as periods add up.
Does this assume I withdraw nothing between periods
Yes. The formula assumes every period's gain stays in the account and is fully reinvested into the next period. Withdrawing any part of the profit along the way would lower the ending balance below what this tool shows.
Can I use this to plan a fixed monthly gain target
You can use it to see what a target would produce on paper, but treat the gain per period as a hypothesis to test, not a number to chase. Real returns vary period to period, and a plan built around hitting an exact figure every time often pushes traders into taking on too much risk.
What happens to this projection if one period is a loss instead of a gain
A single losing period lowers the balance the next period's gain compounds from, which pulls the whole projection down more than the size of that one loss suggests. Use the Drawdown Calculator to see how a run of losses affects the same starting balance.
Why does the period length not matter to the math
The formula only cares about the number of periods and the gain per period, not how long a period lasts in calendar time. A day, a week, a month, or a single trade all work the same way here, as long as you're consistent about what a period means in your own plan.
Next steps
Related tools and lessons
Drawdown Calculator
See how a string of consecutive losses shrinks an account, trade by trade.
Example 10 losses at 2% each = 18.29% drawdown
Open toolRisk of Ruin Calculator
Estimate the odds that a run of trades drags your account down to a loss level you set.
Example 45% win rate, 1.5 R:R, 2% risk, 100 trades = 12.13%
Open toolThese ideas come from Chapter 07: Risk and Money Management →