Compounding Growth Simulator
See the real power of disciplined, consistent trading. Enter your starting balance and monthly return targets to visualise how compounding transforms modest gains into dramatic long-term growth — and understand why risk management is everything.
Configure Your Growth Model
What If I Have a Bad Month?
(Optional)Inject a losing month to see how a single drawdown damages your compounding curve — and how long it takes to recover.
Equity Growth Curve
Compounding vs Simple Returns
The green bar shows compounding growth; the blue bar shows what you'd earn withdrawing all profits each month.
Monthly Breakdown
| Month | Opening | Return | Deposit | Withdrawal | Closing |
|---|
Formula Breakdown
The simulator uses compound interest mathematics, applying your monthly return to the running balance (including previous months' profits) rather than the original deposit.
💡 Core Formula
The Rule of 72
A quick way to estimate how long it takes to double your money: divide 72 by your monthly return percentage. At 5% monthly, doubling takes approximately 72 ÷ 5 = 14.4 months.
⚠️ Reality Check
This simulator assumes perfectly consistent monthly returns, which never happens in real trading. Every trader experiences losing months, drawdowns, and flat periods. Use the "What If I Have a Bad Month?" feature above to model realistic scenarios and see the true cost of drawdowns on your compounding curve.
Key Concepts
Compound Growth
Compounding means your returns earn returns. Each month's profit adds to your trading capital, so the next month's percentage return is calculated on a larger base. Even modest monthly gains become dramatic over 12–24 months when profits are reinvested.
Consistency Over Size
A steady 3% monthly return compounds to over 42% annually — far better than chasing 20% months that lead to large losses. The mathematics of recovery are brutal: a 50% drawdown requires a 100% gain to break even.
Withdrawal Strategy
Many traders reinvest 70–80% of monthly profits while withdrawing 20–30% as income. This balances long-term capital building with real financial benefit. Use the withdrawal field to model this.
Drawdown Impact
Compounding works powerfully in both directions. A trader risking 1–2% per trade can survive a losing streak and maintain their compounding curve. A trader risking 10% per trade can destroy months of compound growth in a single bad week.
✅ Key Takeaway
The most powerful number in this simulator isn't the return percentage — it's the number of months. Time is the multiplier that turns discipline into wealth. A £5,000 account growing at just 3% monthly reaches £14,400+ after 36 months.
Frequently Asked Questions
❓ What is compounding in trading?
Compounding means reinvesting your profits so each month's returns are calculated on a larger balance. Over time, this creates exponential growth rather than linear growth.
❓ What is a realistic monthly return for forex trading?
Realistic monthly returns for consistently profitable retail traders range from 2% to 8%. Many professional fund managers target 1–3% monthly.
❓ How does compounding differ from simple returns?
With simple returns, you earn the same fixed amount based on your original deposit. With compounding, returns are calculated on your growing balance — producing dramatically more over time.
❓ Should I reinvest all profits or withdraw some?
Many experienced traders reinvest 70–80% while withdrawing 20–30% as income. This balances growth with practical financial benefit.
❓ Why is consistency more important than high returns?
A consistent 3% monthly return compounds to over 42% annually. A single 30% loss requires a 43% gain just to recover, destroying the compounding effect.
❓ How long does it take to double a trading account?
Using the Rule of 72: divide 72 by your monthly return percentage. At 5% monthly ≈ 14–15 months. At 3% ≈ 24 months.
Related Tools & Resources
Use our other free trading tools to plan individual trades, manage risk, and protect the compounding growth you're building.
📊 Pip Calculator
Calculate exact pip values for any pair and lot size.
📐 Position Size Calculator
Determine optimal lot size based on risk percentage.
🏦 Margin Calculator
Check required margin and leverage impact.
⚖️ Risk/Reward Visualiser
Drag-and-drop R:R ratio planning with breakeven analysis.
🔄 Swap/Overnight Fee Calculator
Calculate daily rollover costs before entering swing trades.