Compound interest calculator for trading
Updated 2026-09-19
Compound interest is the effect by which gains generate further gains. In trading it is used to simulate account growth, but the numbers must be read with caution: real returns are not constant.
Final balance: 1,425.76
Total deposited: 1,000.00
Estimated gain: 425.76
| Month | Balance |
|---|---|
| 12 | 1,425.76 |
Theoretical simulation with a constant return: not a forecast or a promise of results.
Educational tool: results are estimates and depend on the values you enter. Not financial advice. Trading involves risk.
The formula
Final balance = starting balance × (1 + monthly return) ^ months. With monthly deposits, the amount deposited is added each month after applying the return.
Why simulations mislead
- They assume a constant return, whereas reality alternates positive and negative months
- They ignore drawdown: a -20% needs +25% to recover
- With high returns such as 10% a month the simulated balance explodes unrealistically: few traders sustain it
- They exclude costs, taxes and slippage
How to use it well
Use prudent returns (for example 1-3% a month) and compare them with your trading journal. The goal isn't to promise a result but to understand how much consistency matters compared with one lucky month.
Frequently asked questions
What monthly return is realistic?
There is no guaranteed value. Professional funds usually target single- or low double-digit annual returns. Promises of very high monthly returns are a red flag.
Does the calculator account for risk?
No: it only shows the maths of a constant return. For risk use the drawdown calculator and position sizing.
What if a month is negative?
Enter a negative return to simulate a losing streak and see the effect on the account.