Compounding Calculation: Am I Doing This Right?


I’m getting some crazy large numbers and want to make sure I’m using the right equation for compounding.

Starting point is $200.
Daily growth of 5%.
(Avg. of 252 trading days a year)

Take a look:
200(1.05)^252 = $43,725,356.73

This seems a bit off due to the size of that number. Any help with the equation (or confirmation thereof) would be greatly appreciated.

This is correct math. And is why the “I only need x% per day” statements are funny. Bc it’s obviously not that easy haha


It’s doable until your account grows to a certain size. For example, right now it’s easy for me to enter and exit positions bc I’m buying one or two calls/puts at a time. But you can’t do that easily when you are talking about hundreds of contracts.


Thanks to the both of you!

I saw this was already answered - but I thought maybe I could help a bit more.

Let’s say on this basis you choose to reinvest 50% of the previous day’s profits on average. After 252 days you would have $100,7796.18 Based on the average compounding factor.

As previously stated, at some point Yolo’ing your whole account daily becomes really unpractical.

I would maybe recommend setting some milestones, ie; (this is just an example, not a recommendation)
$200 - Daily goal 200.00 50% reinvest
@ Milestone 1 - “25,000.00”
Spilt Pot 30/70
30% pot - used with the goal of 5% daily goal
70% pot - used for 5% weekly goal

@ Milestone 2 - “50,000.00”

@ MileStone 3 - “100,000”