Calculate the power of compounded returns for your crypto trading account. Model monthly returns, contributions, and long-term growth projections.
Albert Einstein allegedly called compound interest "the eighth wonder of the world." Whether he said it or not, the math is undeniable.
Compound Return Formula
Final Balance = Initial × (1 + r)^n + Contribution × ((1 + r)^n − 1) / r
Where r = monthly return rate, n = number of months
The Doubling Rule
Use the Rule of 72: divide 72 by your monthly return to estimate how many months to double your money.
Why Most Traders Fail to Compound
1. They withdraw profits instead of reinvesting 2. Inconsistent returns — big wins offset by big losses 3. Increasing risk as account grows, causing drawdowns 4. Psychological pressure increases with account size
The Sustainable Path
Focus on consistency above all else. A trader who makes 3% every month for 3 years will outperform one who makes 30% one year and loses 20% the next. Your job is to protect the compounding curve.
Compounding
Reinvesting profits so future returns are calculated on an ever-growing base — generating exponential growth over time.
R-Multiple
A unit of measurement expressing trade outcomes in terms of initial risk — a +2R trade means you made twice your risk amount.
Expected Value (EV)
The average outcome of a strategy over many repetitions — positive EV means profitable long-term, negative EV means losing long-term.
Risk Per Trade
The maximum percentage or dollar amount of your account you are willing to lose on a single trade — the foundation of sound position sizing.
Conservative traders target 3–5% per month. Aggressive traders may aim for 10–20%, but with proportionally higher risk. A consistent 5% monthly return compounds to 80% annual returns — exceptional by any standard.
10% monthly is achievable but challenging to sustain. That would be 214% annualized. Most professional fund managers target 20–30% annually. If you're consistently hitting 10% monthly, you have a genuine edge — but verify over at least 12 months.
Compounding in trading means reinvesting your profits into future positions, so your position sizes grow along with your account. A 5% return on $10,000 = $500. Next month, 5% on $10,500 = $525. This exponential growth is the power of compounding.
Position Size
Calculate the optimal crypto position size based on your account balance, risk percentage, entry price, and stop loss.
DCA
Calculate your average entry price, total cost, and P&L when dollar cost averaging into any cryptocurrency.
Risk:Reward
Calculate your risk-to-reward ratio, potential profit/loss, and breakeven win rate for any crypto trade.