Compounding Calculator
Free compounding calculator: see what a steady return per period grows into over time, with optional contributions — and why drawdowns set compounding back so far.
Compounding is the quiet force behind every long-term track record. See what a steady return per period becomes over time — with optional regular contributions.
QuantDojo · Free tool
Compounding Calculator
What a steady return per period becomes over time — with optional regular contributions.
How it works: end = start × (1 + r)^n, plus the future value of any periodic contributions. Small edges compound into large gaps — and so do small, consistent losses.
Educational tool — not financial advice. Assumes a constant return every period; real returns vary and drawdowns interrupt compounding.
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How to use the compounding calculator
Enter your starting capital, the return per period, the number of periods, and an optional contribution per period. The calculator shows your ending balance, what you put in, and the profit compounding added on top.
Compounding is the quiet force behind every long-term track record — and it cuts both ways. A small, consistent edge compounds into a large gap over time; so does a small, consistent leak from fees, slippage or oversized losses.
Frequently asked questions
How does compounding work in trading?
Each period's gain is calculated on the new, larger balance, so returns grow on previous returns. Over many periods this produces exponential, not linear, growth — end = start × (1 + return)^periods.
Do drawdowns hurt compounding?
Yes, disproportionately. A drawdown lowers the base that future returns compound on, so deep losses set compounding back far more than their headline percentage suggests — which is why capital preservation matters so much.
What return per period should I use?
Use a conservative, validated figure, not your best backtested month. Compounding an optimistic or overfit return just produces a fantasy curve.
Compounding only works on a real edge. Verify yours with quantcheck before you trust the curve.