What does 1% a day compound to in a year?

About 12.3 times the starting balance, over 252 trading days. A thousand becomes roughly twelve thousand. Repeated for a second year it is about 150 times, and that is the point at which the number stops describing anything that happens to real accounts.

Is 5% a month realistic in trading?

5% a month compounds to about 80% a year. For comparison, the S&P 500 has returned roughly 10% a year over the long run, Berkshire Hathaway about 20% a year for almost sixty years, and the best hedge fund on record, Renaissance Medallion, about 39% a year after fees while being closed to outside money. A steady 80% would be the best sustained record in existence.

How much can I withdraw without shrinking the account?

Exactly the profit of one period: balance multiplied by the rate. Withdraw that and the balance never moves. Withdraw more and the account declines even while every period is profitable, because the base the percentage is applied to gets smaller each time.

Compounding calculator

What a fixed percentage does to an account over time — including the two things that decide whether it ever happens: the money you take out, and the periods you lose.

This calculator runs in your browser and needs JavaScript switched on. The explanation below works either way.

What the number would mean

A percentage per month is easy to type and hard to picture, so here is the same thing said in years, next to returns that are a matter of record rather than a target:

Per month	Per year	Someone who did this
0.8%	10%	The S&P 500, roughly, over the long run
1.6%	20%	Berkshire Hathaway, about, for nearly sixty years
2.8%	39%	Renaissance Medallion after fees — the best record there is, and closed to outside money
5%	80%	Nobody, sustained
10%	214%	Nobody, sustained

That is not an argument against having a target. It is an argument for knowing which side of that table your target sits on, because a plan that needs 5% a month to work is a plan that needs something nobody has done for long.

One percent a day

It is the most advertised number in this business, so it is worth doing the arithmetic once. A trading year is about 252 days. 1.01²⁵² is roughly 12.3, so a thousand becomes about twelve thousand in a year. Keep it up for a second year and it is a hundred and fifty thousand, and by the fifth year the number has passed what most banks hold.

Nothing in the maths is wrong. What is wrong is the assumption underneath it: that a percentage can be repeated 252 times without a single miss. Put three losing days a month into the field above and watch which line you end up on.

Why withdrawals matter more than they look

Compounding works because each period's profit joins the base the next period is calculated from. Money taken out never joins that base, so a withdrawal costs you the amount, plus everything that amount would have earned for the rest of the run.

There is a clean line between growing and shrinking, and it is worth knowing where it sits: withdraw exactly one period's profit — balance times the rate — and the account stays where it is forever. Withdraw more and it falls, even though every single period was profitable.

The hole you have to climb out of

Compounding runs both directions, and the downside is steeper than it feels. Lose 10% and you need 11% to get back. Lose 30% and you need 43%. Lose 50% and you need 100% — you have to double what is left to return to the number you started the month with.

This is why the losing-periods field moves the result so much more than people expect, and why position sizing decides the outcome more than the win rate does.

What this does not do

It applies the same percentage every period. Real returns arrive in an order, and the order matters: the same set of monthly returns shuffled differently gives a different ending balance once there are withdrawals. It knows nothing about swap, commission, tax, or the months you stop trading.

And compounding only happens if the position grows with the account. That is the other half of this, and it has its own page: the position size calculator works out the lot size for whatever the balance is today.

A simulation, not a forecast. Nothing here is a claim about what any account, strategy or product will do.