Forex Compounding Calculator

Two machines, one word apart

Take one hundred trades, fifty of them winners at 2 R and fifty losers at 1 R, starting from 10,000 with 1 percent risked on the first trade. Keep the size fixed and the run ends at 15,000.00 — the same hundred dollars at risk a hundred times, fifty of them paying 200 and fifty of them costing 100. Work the size out again before every trade and the same run ends at 16,284.27.

Nothing about the trading changed. The same trades, in the same order, in the same sizes on trade one. The only difference is one word: the first rule adds a fixed sum every time and the second multiplies a fixed share. Over one trade they are the same number. Over a hundred they are 6,284.27 apart, and the gap is not a better strategy — it is the arithmetic of taking your risk as a share of what is left instead of a sum that never moves.

The switch people forget: how often

Recalculating is not a one-off decision, it is a recurring one, and the frequency is a second switch with its own effect. Recalculate every trade and the order the results arrive in does not matter at all: multiplication does not care what order it happens in, so all three orders in the top row of the table land on 16,284.27.

Recalculate once a month and that stops being true. The size is set from the balance at the start of the month and held for the twenty trades inside it, so those twenty results are locked into one size, and the balance at the end of the month is the balance at the start of it times one plus the month's whole result. Which trades fell in which month now decides the ending figure: spread evenly it is 16,105.10, and with the fifty winners arriving before the fifty losers it is 13,798.40. Same hundred trades, same total of R.

The direction is not fixed and this page is not going to pretend it is. Weekly, the alternating run comes out above the every-trade figure and the monthly one comes out below it, because what a block drops is the cross term between the trades inside it — and that term is positive when the trades agree and negative when they do not. What is fixed is the thing worth knowing: once the gap between recalculations is wider than one trade, the order starts to matter, and it did not matter before.

At the far end the switch does something cleaner. Recalculate once a year and the whole run is one block, which is addition: 15,000.00, exactly what never recalculating gives. Stretch the interval far enough and the compounding is gone, not reduced — gone.

Doubling does not care where you started

The question behind most compounding calculators is how long to double, and the answer has a property that surprises people: the number of trades does not depend on the size of the account. Doubling is a ratio, so the starting figure cancels out. At 1 percent risked per trade and an average of 0.5 R per trade, one doubling costs 138.98 trades — from 1,000 to 2,000 or from 100,000 to 200,000, the same count.

That is the honest reason a percentage rule and a fixed-lot rule cannot both be called compounding. A fixed lot earns a fixed sum per trade, and a fixed sum against a growing balance is a shrinking percentage: 100 on 10,000 is 1 percent, and the same 100 on 20,000 is 0.5 percent. The money per trade does not fall. The return does, on every trade, for as long as you keep the size still.

While you are checking a doubling figure against something you read elsewhere: the rule of 72 is an approximation and it rounds in one direction. At 2 percent a period it says 36 periods; the exact figure is 35.00. Close enough for a conversation, wrong enough that a page quoting it as if it were exact is quoting a rounded number as a calculated one.

Compounding only holds while the money stays in

A curve that compounds is a curve that keeps its base. Take money out and the base is smaller on every period that follows, and the cost is not the sum you took — it is the growth that sum would have had. On 10,000 growing 2 percent a period, taking 100 out sixty times leaves 21,405.15 instead of 32,810.30: 6,000.00 in your pocket and 5,405.15 of growth that never happened.

A fixed sum taken out every period has a tipping point, and it is exact: the withdrawal divided by the growth rate, 5,000.00 here. Above that balance the account still grows. Below it the same withdrawal empties it, because the sum does not shrink when the balance does — the balance has to fall twice as fast to feed a payment that stays the same size.

Taking a percentage instead never empties the account, but the two percentages do not cancel the way they look like they should. Growing 2 percent and taking 2 percent is not flat, because the growth is measured on the balance before the withdrawal and the withdrawal is measured on the balance after the growth. Growth stops at 1.96 percent taken against 2.00 percent earned.

Compounding multiplies what is already there

The word has a good reputation and it does not deserve one on its own. Compounding is a multiplier, and a multiplier applied to a negative number makes a negative number bigger. If the average trade loses, sizing every trade off the current balance does not rescue the run — it makes the balance fall faster in money early, and slower in percentage terms later, which is the same thing said the other way round.

That is why the second tool above refuses to answer when the average result is zero or below. It is not a limitation of the arithmetic; it is the arithmetic saying the target is not reachable at any number of trades, and a page that handed you a large number of months anyway would be inventing it.

The ladder under the curve

A curve is continuous and a lot size is not. Platforms accept a size only in steps — 0.01 is the common one — and any size that is not on a step gets rounded, and rounded down if you want the risk to stay inside the budget. So the compounding of a real account is a staircase: the balance moves every trade and the size moves only when the balance crosses a rung.

On the defaults above the run starts at 0.50 lots and finishes at 0.82, and it got there in steps, not along a line. A step is small against 0.50 and it is the whole story against a small account: 1 percent of 500 is 5.00, which at a 20 pip stop on a 100,000 contract is 0.025 lots, and rounded down to the 0.01 step that is 0.02 — a size that risks 4.00, not the 5.00 the percentage asked for. Below the platform's minimum size the trade cannot be put on at all, and no percentage rule reaches past that. The size a platform will accept, and the step it moves in, are read off the symbol specification — the MT4 and MT5 lot size page is where that is worked out.

What this page does not assume

No win rate, no average winner, no average loser, no expectancy. All four are fields. This page has no opinion about what yours are and no "typical" figure to fall back on.

No costs. Every table here is gross of spread, commission and financing, which is a deliberate separation: costs belong to the profit line, and they are on the forex profit calculator, where they change the break-even distance and the win rate you need. Mixing them into a compounding table would make two effects impossible to tell apart.

No randomness. These are fixed sequences with a fixed average, not simulations. A real hundred trades do not arrive in a fixed order at a fixed average, and the drawdown figures here are the drawdown of the sequence you typed, not a range of possible ones. A page that reported a "likely" outcome would be making it up.

No contract size, no pip size, no lot step. Three fields, because all three are properties of a symbol and a platform this page cannot see, and none of them is standard.

No tax, and no interest on the balance. Whether gains are taxed, when, and at what rate depends on where you live; whether an idle balance earns anything depends on the firm holding it. Neither is arithmetic this page can do.

No recommendation on frequency, and none on withdrawals. The table shows what each frequency does to the same trades. How often you can be bothered to resize, and whether you need the money out, are not questions a calculator answers — and this page does not answer them for you.

Frequently asked questions

What is a forex compounding calculator?

A tool that works out what a balance grows into when the size of each trade is taken as a share of the balance you have at the time, rather than as a fixed number of lots you picked once. That is the whole definition. The first tool on this page runs it over a set number of trades with the win rate and the average result you enter, and shows the same run under the fixed-lot rule next to it.

How do you calculate compound interest in forex?

Per trade, it is one plus the risk fraction times the result in R, multiplied into the balance: risking 1 percent and making 2 R multiplies the balance by 1.02. Over a run, it is that factor once per trade. Over a period in which you trade more than once without resizing, it is the period's whole result applied once: 1 plus the risk fraction times the sum of the R in the period. That difference is the frequency row in the table above. It is also the daily compounding formula, with the period set to a day — and it is only different from the per-trade formula if you take more than one trade in a day.

What is forex compounding?

Resizing every trade from the balance you have, rather than trading the same size you started with. That is the whole of it. It is not a strategy, not a setting and not a promise: it is what happens automatically when the size comes from a percentage of a balance that has changed.

Is this a forex compound calculator, a compound interest calculator or an account growth calculator?

All three names get used for the same arithmetic, and this page is that arithmetic whichever of them you arrived with. "Compound interest" is the borrowed term — nothing in a trading balance pays interest, but the shape of the curve is the same one. "Account growth" is the vaguer of the three and usually means a projection with a monthly percentage typed in, which is the same calculation leaving out the part about how often the size is actually resized.

Is compounding the same thing as increasing my lot size?

It is the same mechanism and not the same decision. Compounding is the size going up because the balance went up and you sized off the balance. Increasing your lot size because you feel like it, or because you had a good week, is a different act with the same arithmetic — and the arithmetic does not know which one it was serving.

How long does it take to double a forex account?

In trades, it is the one thing on this page that does not depend on the size of the account: at 1 percent risked per trade and an average of 0.5 R per trade, 138.98 trades, whether the account is 1,000 or 100,000. In months, divide that by how often you trade — the second tool does it and shows both. Halve your trading frequency and the date doubles while the trade count does not move.

Is the rule of 72 accurate?

It is an approximation, and it is a good one at small rates and a visibly wrong one at large ones. At 2 percent a period it says 36 periods where the exact figure is 35.00. The second tool shows the rule's answer and the exact one side by side, with the gap between them, rather than picking the tidier of the two.

Does the order of my wins and losses matter?

For the ending balance, it depends entirely on how often you resize. Resize every trade and no — all three orders land on the same number, because multiplication does not care about order. Resize monthly and yes: the same hundred trades end at 16,105.10 alternating and 13,798.40 with the winners first. For the deepest drawdown on the way, order matters in every case and frequency has nothing to do with it.

How often should I recalculate my position size?

This page is not going to tell you, because the right answer is about how much work you will actually do and how much a resized trade differs from the last one — both of which depend on your balance and your platform's lot step. What it can tell you is the shape of the trade-off: more often is closer to the top row of the table, and the top row is the only one where the order of your results stops mattering. Less often is closer to the bottom row, where the compounding has gone.

Why does my balance not compound if I keep the same lot size?

Because a fixed lot earns a fixed sum per trade, and a fixed sum against a growing balance is a shrinking return. Earning 100 on a 10,000 balance is 1 percent; earning the same 100 once the balance is 20,000 is 0.5 percent. The money per trade never falls, the percentage does, on every trade from the first one. That is what puts 15,000.00 in the bottom row of the table above and not 16,284.27.

What does a compounding calculator with lot size mean?

It means the run is reported in lots rather than only in money — what the risk budget buys at the start of the run and what it buys at the end. That is the "lot size, first trade to last" row on the first tool: 0.50 lots to 0.82 on the defaults, at 20 pips of stop on a 100,000 contract. Put your own contract size, pip size, stop distance and lot step in and it reads your run instead.

Does leverage change compounding?

Not directly. Leverage is not in the growth factor — risk fraction times result in R — and it is not in the profit formula either. What leverage changes is the largest size you are allowed to open, and through that whether the size the percentage rule asks for is available. Where leverage does reach the outcome is the stop-out: it sets how far price can travel before the position is taken away, and that is measured on the forex margin calculator.

Can I use this for daily compounding?

Yes, and it is the "every day" row — but read what it actually does. Daily recalculation only differs from per-trade recalculation if you take more than one trade a day, which is why the trades-per-period field is there and why it is the number that matters. Compounding does not happen on the calendar. It happens when you resize, and the calendar is only a proxy for that.

Can I put this in Excel?

The copy button on each tool puts the result, and the frequency table, on your clipboard as rows you can paste straight into a spreadsheet. The arithmetic is in the text above if you would rather build it yourself: one plus the risk fraction times the result in R, compounded per trade, or per block if you resize less often than you trade.

Do withdrawals stop compounding?

They reset the base, which is the same thing for every period that follows. The third tool works it out two ways: a fixed sum, which has an exact tipping point at the withdrawal divided by the growth rate and empties the account below it; and a percentage, which never empties it but stops the growth above a threshold that is not the growth rate — 1.96 percent against 2.00 percent.

What win rate do I need for compounding to work?

Compounding does not have a win rate requirement of its own — it multiplies whatever expectancy is already there, and a negative expectancy compounds downwards. The win rate you need to break even at a given average winner and loser is a separate calculation, and it is on the risk reward calculator.

Do I need my broker's own compounding calculator instead?

For the figure that will actually happen on your account, yes. A firm's own calculator knows that firm's contract sizes, its lot step, its minimum size, its commission schedule and whether it pays anything on an idle balance, and none of those are visible from here.

What this page adds is the part a single projected balance cannot show: that the frequency you recalculate is a second switch and not a detail, that the order of your results starts to matter the moment that switch is not "every trade", that doubling costs the same number of trades from any starting balance, and that the fixed-lot rule people call compounding is arithmetic that gets slower every trade. Those are the parts a projected number hides.

The run above starts from a size, and the size comes from a stop and a risk budget — that is what the lot size calculator is for. What one trade earns, and what the costs take off it, is on the forex profit calculator, and what a losing run does to a balance in percentage terms is on the forex stop loss calculator.