Visualize the exponential power of reinvested profits
| Period | Balance | Gain | Cumulative % |
|---|
Compound growth is often called the "eighth wonder of the world." When you reinvest your trading profits, each period's returns generate additional returns on top of previous gains, creating exponential growth over time.
The formula is: FV = PV × (1 + r)^n where PV is your starting balance, r is your gain rate per period, and n is the number of periods.
Even a modest 2% gain per trade, compounded over 70 trades, would double your account. At 5% per month, a $1,000 account becomes $1,795.86 in 12 months — a 79.6% return compared to only 60% with simple (non-compounded) growth.
With simple growth, you earn the same fixed amount each period. With compounding, each period's gain is calculated on the growing balance. The difference starts small but becomes dramatic over time — this is the "compounding advantage" shown in the results above.
A quick estimation: divide 72 by your gain percentage to find how many periods it takes to double your money. At 6% per month, it takes approximately 12 months to double. At 10%, approximately 7.2 months.