Forex Compound Calculator

This page compounds a fixed return across a number of periods. You supply a starting balance, a target return per period, and how many periods to run, and it multiplies the balance by the same growth factor that many times. Every gain stays in the account and works in the next period, which is what people mean when they talk about compounding a trading account rather than withdrawing profits as they arrive.

A period is whatever you say it is. Set it to a trading day, a week or a month, and the calculator uses that choice when it converts your per period figure into an annual one. That conversion is the part worth getting right, because a year holds 252 trading days, 52 weeks or 12 months, and the same 0.5% means wildly different things depending on which you meant.

What it deliberately leaves out

There is no spread, no commission, no swap or overnight financing, no slippage and no tax. There is also no variance: every period returns exactly the number you typed. Real accounts have losing periods, and the last section of this page is about why that single omission changes the answer more than all the fee assumptions combined.

The honest way to use the tool, then, is backwards. Rather than asking what a target turns into, ask what a target would have to be to reach a number you care about, and then ask whether that target is one you have actually hit repeatedly, over a sample long enough to mean something, after costs. The calculator answers the first question instantly and the second not at all.

The single most useful thing this page does is show that a per period return is worth more per year than twelve times itself. Compounding means each period grows a slightly larger base, so the annual figure runs ahead of the simple multiple, and the gap widens as the rate rises.

At 1% a month the naive answer is 12% and the real one is 12.68%. At 2% the naive answer is 24% and the real one is 26.82%. At 3% it is 36% against 42.58%. At 5% it is 60% against 79.59%. At 10% a month, twelve times the rate would be 120% and the true figure is 213.84%, nearly double the estimate. Anyone budgeting from the simple multiple is understating what their own target implies.

The same arithmetic run forward is a warning

The page opens on 5% a month because that is the sort of number people type. Run it and 1,000 becomes 1,795.86 after a year, a gain of 795.86. Keep going and it becomes 3,225 after two years, 5,792 after three, 18,679 after five and 348,912 after ten. That last figure is a 349 times multiple of the starting balance.

Push it further and the output stops resembling money. The same 5% a month sustained for twenty years turns 1,000 into roughly 122 million, and for thirty years into roughly 42 billion. Nothing in the arithmetic objects, because the arithmetic was never asked whether the rate was achievable. When a projection produces a number like that from a rate that sounded modest, the rate was not modest.

Targets that survive contact with arithmetic

Lower targets still compound into something worth having, and they do it without requiring an implausible year. At 0.5% a month the annual figure is 6.17%, and 1,000 becomes 1,349 over five years. At 1% a month it is 12.68% a year and 1,817 over five years. At 1.5% it is 19.56% a year and 2,443. At 2% it is 26.82% a year and 3,281, more than tripling the balance in five years.

Doubling time makes the same point compactly. At 1% a period an account doubles in 69.7 periods, at 2% in 35.0, at 3% in 23.4, at 5% in 14.2 and at 10% in 7.3. If the doubling time your target implies is shorter than the time you have been trading, the target is a hypothesis rather than a plan.

A constant return per period is not merely optimistic, it is the wrong shape. Real results scatter around an average, and three separate effects mean that scatter costs money even when the average is unchanged.

Losses need bigger gains to undo them

A loss and the gain that reverses it are not the same size, because the gain works on a smaller base. Lose 10% and you need 11.11% to get back. Lose 20% and you need 25%. Lose 30% and you need 42.86%. Lose 50% and you need 100%. Lose 70% and you need 233.33%. Lose 90% and you need 900%, which is why deep drawdowns are usually terminal in practice even though the arithmetic offers a way back.

Priced in time, at the page default of 5% a period, a 20% drawdown takes 4.6 periods of hitting target just to return to where you started, a 30% drawdown takes 7.3 and a 50% drawdown takes 14.2. Those periods are not progress. They are the cost of the drawdown, paid at the best rate you claim to manage.

The same asymmetry is why position sizing dominates target setting. Risking 1% of the account per trade, ten consecutive losses cost 9.56% and twenty cost 18.21%, both survivable. Risking 5%, ten losses cost 40.13% and twenty cost 64.15%. Risking 10%, ten losses cost 65.13% and twenty cost 87.84%, which is not a drawdown so much as an ending. Losing streaks of that length are ordinary at any realistic win rate.

Volatility costs money even when the average is zero

Alternate a 10% gain with a 10% loss and the arithmetic average is zero, but the account falls 1% every pair, because the loss applies to a larger balance than the gain did. Over ten pairs that compounds to a 9.56% loss from nothing but the alternation. Widen the swings and it accelerates sharply: alternating 20% moves lose 4% per pair and 33.52% over ten pairs, 30% moves lose 9% per pair and 61.06%, and 50% moves lose 25% per pair and 94.37%.

Per period the drag is small at small swings and brutal at large ones: roughly 0.13% for alternating 5% moves, 0.50% at 10%, 2.02% at 20% and 4.61% at 30%. This is why two accounts reporting the same average return can end years apart, and why a smoother strategy with a lower average often finishes ahead of a wilder one with a higher average.

A single bad period makes the point without any alternation at all. Twelve periods at 5% turn 1,000 into 1,795.86. Replace one of those twelve with a 20% loss and the result is 1,368.27, which is 23.81% below the clean run. Make that one period a 30% loss and it is 1,197.24, down 33.33%. Make it a 50% loss and it is 855.17, down 52.38% and below where the account started, after eleven successful periods out of twelve.

Costs are charged per period, so they compound too

Spread, commission and swap come out of every period, which means they are not a one off deduction but a permanent reduction in the growth factor. Against a 5% target over twelve periods, a cost of 0.1% per period brings 1,795.86 down to 1,775.44, a 1.14% reduction. At 0.25% it becomes 1,745.21, down 2.82%. At 0.5% it is 1,695.88, down 5.57%. At 1% per period it is 1,601.03, down 10.85%.

Because this page has no cost field, the correct way to use it is to enter a target already net of everything you pay. Enter the number that lands in the account, not the number the strategy produces before the broker takes a share, and note that costs scale with how often you trade while returns may not.