The compounding formula
Return needed per period = (Target ÷ Capital)1/n − 1
r = return per period, n = number of periods
Reality check: what daily percentages mean
Compound calculators make small daily numbers look easy. Over a year of about 250 trading days:
| Every trading day | After 250 days | ₹1,00,000 becomes |
|---|---|---|
| +0.25% | +87% | ≈ ₹1,86,700 |
| +0.5% | +248% | ≈ ₹3,47,900 |
| +1% | +1,103% | ≈ ₹12,03,200 |
| +2% | +14,027% | ≈ ₹1,41,26,800 |
Very few traders sustain anything like 1% a day. Real returns come in uneven steps with losing days and losing months, and losses hurt compounding more than equal gains help: alternating +2% and −1.5% days averages +0.25% a day but turns ₹1,00,000 into about ₹1,79,700 in 250 days, not ₹1,86,700.
Compounding in R: what really drives growth
Your growth per trade is roughly risk per trade × expectancy in R. Risking 1% of the account on a strategy that makes +0.3R a trade adds about 0.3% per trade on average. Twenty trades a month is about 6% a month before the bad streaks. To grow faster you can raise expectancy (better setups, fewer leaks) or risk — and risk is the lever that also deepens your drawdowns.
Frequently asked questions
How do you calculate compounding in trading?
Multiply your capital by (1 + return per period) once for every period: capital × (1 + r)^n. For 5% a month over 12 months, 1.05^12 ≈ 1.796, so capital grows by about 79.6%.
How much is 1% a day compounded for a year?
About 12 times your capital over 250 trading days (1.01^250 ≈ 12.0) — a gain of roughly 1,100%. Sustaining it is extremely rare; use the numbers as a reality check, not a plan.
What return do I need to reach my target?
Return per period = (target ÷ capital)^(1/n) − 1. Turning ₹1,00,000 into ₹10,00,000 in 36 months needs about 6.6% every month; in 250 trading days it needs about 0.93% every day.
Should I withdraw profits or compound them?
Compounding grows faster when it works, but larger positions also mean larger losses. Many traders compound in steps — raising size only after a new equity high — and withdraw a share of profits regularly.
How many trading days are in a year?
Roughly 250 for stock markets (around 248–252 depending on the exchange and holidays). Crypto trades every day, so use 365 for crypto.
Track your real growth, not a projection
Profit Prism Journal shows your actual equity curve, win rate, expectancy in R and drawdown — the numbers compounding really depends on. Try it free for 7 days, no card.
Start the free trialFor education only. Not investment advice. Projections are arithmetic, not a forecast; trading involves substantial risk of loss.