Compound Interest Formula for Trading

The mathematical formula for calculating compound growth in a trading account.

The Formula

FV = P x (1 + r)^n + PMT x [(1+r)^n - 1] / r
Where P = principal, r = monthly rate, n = months, PMT = monthly contribution

Worked Example

Compound Example

$10,000 initial, 5% monthly return, 12 months
FV = $10,000 x (1.05)^12 = $17,958.56
With $500/month contribution:
FV = $10,000 x 1.7959 + $500 x [(1.05^12-1)/0.05] = $17,959 + $7,960 = $25,919

Python Implementation

from gfil_calculators.position_size import calculate_compound_interest
result = calculate_compound_interest(10000, 60, 1, 500)
print(f"Final value: ${{result['final_value']:,.2f}}")

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