Forex Compounding Calculator

Interest rates are one of the most important driving factors in the foreign exchange market, as it determines whether a currency is going to appreciate in value, or depreciate in value. If you have a currency pair that has high-interest rates then the value of that currency is likely going to be high, because investors can expect greater returns. Likewise, if a currency pair has low-interest rates then you can expect to the value of that currency decline, as investors won’t see as much return on their investments. This basic information should be a staple part of any traders plan as it is vitally important to know which currency pairs at any given time, which is why forex compound calculators are becoming increasingly popular.

Forex Compound Calculator - What Are They?

So what is forex compounding Calculator and how can it help you as a trader become more successful? I’m going to go ahead and say it straight off the bat and say that forex compounding alone won’t help you become a better trader, there I said it. Now that I’ve got your attention, let’s find out how forex compounding can help make you a more profitable trader.

In the world of forex trading, we are constantly looking to make gains on our trades and investments. Because that is how we survive. We thrive off the movements of the currency markets and take action by either buying or selling at very specific times, with the aim of capturing huge swings in order to generate as much profit as possible. Although trading has a lot to do with what strategy you use and what currency pair you trade, people quite often forget about one simple and salient factor. This is of course your capital, because without it you won’t be able to make money and increase your account size.

Forex Compounding Calculator

Forex trading calculation

Your capital is what allows you to trade and make money whether that be from currencies or stocks. But the simple fact is, you need profit to be able to keep building on top of your original account size. This will allow you to trade larger amounts of win bigger trades. But how can you do that? Well let me introduce you to the forex compounding or as some people call it the forex pip calculator. This is a simple calculation that can help you determine the size of a potential win or loss based on your current account size. Forex compounding is the process where earnings are reinvested into your account to generate additional earnings over a long period of time. A perfect example of this would be to say you deposited $1000 into a trading account, and in your first month you cleared 20%, which would increase your total account size to $1200. And here is where most people go wrong and withdraw that cash to spend on needless materialistic items, instead of reinvesting that profit. With your account rising from $1000 to $1200 you are able to make slightly larger trades, which could increase your account to $2000 in no time at all.

How Do They Help Traders?

To highlight an eye-opening statistic, if you started off with an initial deposit of $1000 and made roughly 20% each month and reinvested that profit back into your account and increased your trades accordingly, within 2 years you could have over $100,000 in your account. The result is simple, and I can’t emphasize enough the importance of forex compounding as it can literally turn your trading around in a relatively short time-frame. Right now, you are privy to information that not many people know about because they simply don’t know how to trade properly but now you do.
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