Compounding is what makes small, consistent gains matter over time — and it is also the mechanism behind most unrealistic promises in this industry. This calculator shows you the arithmetic honestly, including what happens when you withdraw along the way, and flags the point where your assumptions stop being plausible.
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Compound growth calculator
Deposits and withdrawals are applied at the end of each period, after that period’s return. Withdrawals stop automatically if the balance runs out — the account cannot go negative.
| Year | Balance | Deposited to date | Growth to date |
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How to use it
- Starting balance — the capital you are actually beginning with.
- Return per period — your assumed gain per month, week or year. Be conservative here; this single input drives everything.
- Period — how often returns compound. Weekly compounding at the same rate produces far larger numbers than monthly, which is worth understanding before you compare figures from different tools.
- Years — the horizon you are modelling.
- Added each period — regular deposits, if you plan to keep funding the account.
- Withdrawn each period — regular withdrawals. Enter a figure here to see the real cost of taking money out.
How compounding actually works
The formula is ending balance = starting balance × (1 + rate)periods, with deposits and withdrawals applied each period. The exponent is what does the work. At 2% a month, $5,000 does not become $5,000 plus 120 months of $100 — it becomes considerably more, because month 60’s return is calculated on a balance that has already grown for 59 months.
The same exponent works in reverse. A string of 2% losses shrinks the base each time, so each subsequent loss costs fewer dollars but the cumulative percentage damage keeps mounting. Compounding is direction-neutral; it amplifies whatever you feed it.
One consequence traders often miss: compounding frequency matters as much as the rate. Two percent weekly is not four times two percent monthly. It is dramatically more, because you are applying the exponent 52 times a year instead of 12. Any comparison between strategies has to hold the period constant or it is meaningless.
The reality check
Here is the part most compound calculators leave out. Enter 5% monthly on $10,000 over ten years and this tool will tell you the account reaches roughly $3.4 million. The arithmetic is correct. The scenario is fiction.
Sustained monthly returns in that range would place a trader far ahead of essentially every professional fund on record, indefinitely, without a single losing month. That does not happen. Retail forex and CFD trading is an activity where the majority of accounts lose money — in jurisdictions that require brokers to publish the figure, the share of losing retail accounts is typically somewhere between 65% and 85%. Canada does not mandate that specific disclosure, but there is no reason to think Canadian outcomes differ materially.
This is why the calculator warns you above 100% annualised. Not because the multiplication is wrong, but because a number that large is a signal that the input was aspirational rather than evidence-based. If you are modelling seriously, run the scenario at a rate you have actually achieved over at least a year of records — and then run it again a few points lower.
If someone shows you a compound projection as a promise
Screenshots of exponential account curves are a standard feature of forex signal-selling and account-management scams. A projection is not a track record. Anyone guaranteeing a monthly return, managing your money without registration, or asking you to deposit with an offshore broker is a problem — see how to check any broker and our CIRO broker checker.
Why drawdowns break the model
Every compound calculator, including this one, assumes the identical return arrives every single period. Real accounts do not behave that way, and the gap between the two is not symmetrical.
Losses hurt more than equivalent gains help. Lose 20% and you need 25% to recover. Lose 50% and you need 100%. Lose 80% and you need 400%. A trader who averages a respectable return but gets there through violent swings will finish well behind a smooth-returning account with the same arithmetic mean, because the drawdowns permanently reduce the base that future gains compound on.
The practical implication is that risk control matters more than return targets. This is why position sizing — sizing each trade so a loss costs a fixed, small percentage — does more for long-run compounding than chasing a higher win rate. Our position size calculator handles that side of it, and our profit and loss calculator shows what individual trades actually returned.
This tool is educational and simplified. Trading forex and CFDs carries a high risk of loss; nothing here is financial advice.
Frequently asked questions
How does compounding work in a trading account?
Each period’s return is applied to the balance produced by the previous period, so gains earn gains. Ten percent on $5,000 gives you $500; the next ten percent is applied to $5,500 and gives you $550. Over long stretches this curve steepens sharply, which is the entire appeal — and also why the same maths makes losses compound against you.
Is a 2% monthly return realistic in forex?
Two percent a month compounds to roughly 27% a year, which would put you ahead of most professional funds over a sustained period. It is possible in individual months and unrealistic as a reliable long-run average. Retail forex is a high-risk activity in which a large share of accounts lose money; brokers in many jurisdictions are required to publish those loss percentages, and they are typically between 65% and 85%. Treat any number you enter here as a hypothetical, not a plan.
Why does the calculator warn me about high return rates?
Because the arithmetic will happily project a small account into millions if you let it, and that projection tells you nothing about whether the return is achievable. The warning appears when your inputs imply an annualised return above 100%. The maths is not wrong; the assumption is.
What happens if I withdraw profits instead of compounding them?
Growth slows considerably, which the calculator shows directly when you enter a withdrawal figure. That is not automatically the wrong choice. Withdrawing realised profits protects them from a future drawdown and, for many traders, is the difference between a trading account and a theoretical exercise. There is a real trade-off between compounding and capturing.
Does compounding account for drawdowns?
No, and this is the biggest limitation of any compound calculator. It assumes a smooth, identical return every single period. Real trading produces losing streaks, and losses are asymmetric: a 50% loss requires a 100% gain just to get back to even. A model that returns 2% every month without exception describes something no trading account has ever done.
Do I owe tax on compounded trading gains in Canada?
Gains are generally taxable when realised, whether or not you withdraw them from the account. Whether they are treated as capital gains or as business income depends on how the CRA classifies your activity, and that classification drives a substantial difference in what you owe. Our guide to forex trading taxes in Canada explains the criteria.