Compounding only multiplies an edge you already have
Percentage risk sizing is the quiet engine behind every account that grows instead of grinding sideways. Risk a flat $20 a trade and a winning system adds a straight line of dollars; risk 2% of the balance and each winner enlarges the next position, so the same edge bends the curve upward. That's compounding — and it's real — but it is strictly a multiplier on expectancy. This calculator computes your per-trade expectancy first: win rate times reward, minus loss rate times risk. If that number is positive the projection grows; if it's zero or negative, compounding just shrinks every following bet faster on the way to zero. Plenty of traders obsess over compounding spreadsheets while running a negative edge — the maths is merciless about that, and it's the first thing shown here.
The projection applies the expected number of wins and losses for your win rate, so it smooths over the order of trades. Reality is path-dependent: the identical edge can suffer a brutal drawdown before it ever compounds, and a losing streak early — when percentage sizing is still cutting the bet down — can end the account before the average plays out. So read the curve as the centre of a cloud of outcomes, not a guarantee. Cross-check how survivable your risk per trade is with the risk of ruin calculator, set each position from that risk with the position size calculator, and pressure-test a bot's edge after fees with the bot profit reality check.
How to use it
1. Enter your starting balance and the percentage of it you risk per trade.
2. Put in your win rate and reward-to-risk (a 2 means winners are twice the size of losers).
3. Set how many trades to project, and a per-trade fee if you want it dragged out of each result.
4. Read the expectancy first, then the compounded balance and how far it beats flat staking.
Common mistakes
Compounding a negative edge. If expectancy is below zero, a bigger sample just loses more reliably — fix the edge before the sizing. Risking too much per trade. Above ~2–3% the drawdowns from normal losing streaks get violent and the average curve stops mattering. Trusting a smooth line. The projection is an average; your real path will have drawdowns the curve hides. Ignoring fees and funding. On small reward-to-risk trades, costs can flip a marginal edge negative — model them.
FAQ
What win rate do I need? It depends on reward-to-risk. At 2:1 you only need to win about 34% to break even; at 1:1 you need over 50%. The calculator shows expectancy so you can see instantly whether your combination is positive.
Why is the compounded result sometimes lower than flat? When expectancy is negative, compounding compounds the losses — percentage sizing shrinks the account faster than a fixed stake would. The "compounding edge" column goes negative to show it.
Does this include leverage? Indirectly — leverage is baked into how big a move your risk percentage represents. Size the actual position with the position size calculator and the safe leverage calculator.