What the Compounding Formula Measures
Without cash flows, ending balance = starting balance × (1 + r)^n, where r is the assumed daily net return as a decimal and n is the number of modeled trading days. Profits increase the next daily base; losses reduce it. This is arithmetic under a constant-return assumption, not a model of the forex market.
For illustration, $10,000 × 1.005^252 is about $35,144, a 251.44% gain. The large result shows how sensitive a long projection is to its input. It does not make 0.5% every day a conservative, typical, or reliable target. The default 5 days × 52 weeks actually models 260 days, without market holidays.
Use the Inputs and Cash Flows Consistently
- Enter a positive starting balance and an assumed net daily return. Include your own cost assumptions in that rate; spread, commission, financing, and tax are not separate inputs.
- Choose whole trading days per week from 1 to 7 and weeks from 1 to 520. Seven days is a mathematical option, not a claim that retail forex trades every day.
- Choose deposits at each modeled day-end, week-end, or complete four-week boundary. Deposits start earning the assumed return on the following day.
- Choose a withdrawal percentage of the entire balance after that daily return and deposit. This can remove principal. The calculator does not identify realized profits for withdrawal.
A hypothetical one-day week with $1,000, a 1% return, a $100 deposit, and a 10% weekly withdrawal ends at ($1,000 × 1.01 + $100) × 0.9 = $999. The withdrawal is $111 and trading profit is $10. A lower ending balance need not mean a trading loss when money was withdrawn.
Daily and Monthly Rates Need Comparable Horizons
A daily rate equivalent to a 10% return over 21 trading days is 1.10^(1/21) − 1, about 0.4549% per day. Applying that rate for 252 days or 10% for 12 months gives the same hypothetical $31,384 from $10,000. Comparing unrelated daily and monthly rates does not isolate a benefit from compounding frequency.
The schedule four-week blocks are not calendar months. At five days per week, each complete block has 20 days, and 52 weeks contains 13 blocks. A final incomplete block is shown in the table but does not trigger a four-week deposit or withdrawal. The 20-day and 252-day rate cards are fixed-rate illustrations without cash flows, independent of your chosen schedule.
Read the Outputs Without Confusing Deposits with Returns
Dollar profit = ending balance − initial balance − deposits + withdrawals. The displayed profit/initial ratio divides this profit by starting capital. With cash flows it is neither a time-weighted return nor an internal rate of return. Adding money can increase dollar profit without improving the assumed rate.
For positive r, doubling time is ceil(log(2) / log(1 + r)): 139 trading days at 0.5% or 70 at 1%, ignoring cash flows. It is unavailable for a zero or negative rate. Real variable returns compound as a product: a 10% gain followed by a 10% loss leaves 99% of initial capital, even though their arithmetic average is zero.
Limits of a Constant-Return Scenario
This tool does not estimate a strategy expected return, probability of loss, drawdown path, leverage limit, or broker margin call. A smooth positive projection omits the losing streaks that can prevent a trader from following a plan. Withdrawals reduce capital exposed afterward but do not prove an improvement in risk-adjusted performance.
The CFTC's forex customer advisory explains that leverage magnifies losses and that traders can lose more than their initial margin. The Investor.gov compound interest calculator provides a separate savings illustration. Neither source establishes a dependable daily forex return. Use these scenarios for education, not as a promise of results.