Trading glossary
Compound Growth
Compound growth is the effect of reinvesting profits so that returns build on previous returns, rather than trading a fixed size. Over many trades, compounding is what turns a modest edge into substantial growth, but it also amplifies drawdowns, so it must be managed with position sizing. A journal shows the compounding effect in your equity curve and lets you model whether your current size is sustainable through drawdowns. Traders Vault tracks your equity over time so you can see the compound curve of your real results, not a projection.
What is Compound Growth in trading?
Compound growth is the effect of reinvesting profits so that returns build on previous returns, rather than trading a fixed size. Over many trades, compounding is what turns a modest edge into substantial growth, but it also amplifies drawdowns, so it must be managed with position sizing. A journal shows the compounding effect in your equity curve and lets you model whether your current size is sustainable through drawdowns. Traders Vault tracks your equity over time so you can see the compound curve of your real results, not a projection.