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Trading equity compound calculator
See how a starting account would compound month-over-month at a given return rate, including a realistic drawdown haircut.
| Month | Start | Gain | Withdrawn | End (clean) | End (haircut) |
|---|
The two scenarios you should compare
Clean compounding assumes your monthly return target hits every month. Reality is choppier. The haircut scenario applies a one-time drawdown of N% at the worst possible point in the sequence - usually month 4-6 - and shows how the recovery affects the final equity. A 30% mid-curve drawdown is conservative for a system targeting 3-5% monthly.
Why most "1% per day" calculators lie
1% per day compounded over 252 trading days = +1,225% per year. That math is real. What's not real is the assumption that 252 trading days arrive in sequence with zero drawdown. In every real signal service, there are weeks where you take 4-6 stop-outs in a row. Those weeks reset the compounding curve to a lower base. After 2-3 such weeks per year, the actual annual return collapses to 50-150% - still excellent, but a tenth of the naïve calculator.
Our calculator above includes a haircut field. Set it to 0% to see the fantasy curve; set it to 30% to see something defensible.
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FAQ
What's a realistic monthly return for a signals service?
1-5% per month is realistic for a disciplined, well-validated system at 0.5% per-trade risk. 5-10% is aggressive but possible. Anyone promising 30%+ monthly is selling you variance disguised as edge.
Why does compounding matter so much?
Constant 3% per month at flat $1,000 starting size = $360/yr. The same 3% per month COMPOUNDED on a growing account ≈ +43% after 12 months = $430. After 5 years it's +474%. Compounding is the entire game in long-horizon trading.
What's the catch?
Drawdowns destroy compounding. A 30% drawdown wipes out months of gains AND your next gains compound from a smaller base. The math only works if you actually survive the bad weeks - which means small per-trade risk.
Should I withdraw or compound?
Most traders compound the first 12 months to grow the base, then withdraw 50% monthly after they hit a target (e.g. $10k). Withdrawing early starves the compounding engine. Withdrawing nothing forever ignores the fact that this is real money.