Forex Compounding Calculator
Forex Trading – what is it?
Forex trading is about buying and selling currencies in the foreign exchange (forex) market. This market is basically the global market for currency trading. It is not attached to any specific government and is therefore a decentralized market.
Recent years have seen a significant rise in online currency trading options. There are lots of platforms out there to choose from. These platforms are about trying to enable investors and traders to make a profit through currency exchanges.
Calculating forex earnings and profits
This forex compounding calculator is specially designed to help you calculate profits and earnings from forex trading. This is a relatively simple calculation. To work out the profits from forex trading transactions, you begin by entering your starting balance, your percentage, and the number of months into the formula for compound interest.
This calculation returns a compound interest projection figure for future earnings. Seeing this will give you a guide as to the profits you might obtain from your foreign exchange trading. When using the calculator be aware that the Forex Compounding Calculator works to the assumption that any further or additional contributions you make are made at the end of the period concerned.
Whatever your currency, it works.
The Forex Compounding Calculator works with multiple currencies. It does not matter if your base currency is the US dollar, sterling, the euro, or the renminbi or the baht – it works for all currencies.
For those who are trading in cryptocurrencies or a currency that is not represented by a symbol on the calculator, use the black square option under the currency options. Most likely currency options, are, however, represented.
Note: other calculators on the site that may be of interest for this area of calculation are our Systematic:
Investment Calculator | APY Calculator | CAGR Calculator
Examples
Here are 2 examples of forex compounding calculations.
Example 1
Imagine you begin your forex trading with a balance of $1000 and you are looking to obtain a projected profit of 5% per month. To calculate the projected profits or earnings after 6 months your calculator would be as follows:
Principal (P) = 1000
Rate (r) as a decimal = 5/100 = 0.05
Time in months = 6
Add these figures into the compounding formula
A = P(1+r)^t
This gives
A = 1000 * (1+0.05)^6
A = 1000 * 1.340095640625
A = 1340.095640625
A = \$1340.09
Your profit figure at these amounts, rates and timescales is therefore Amount minus Principal
A - P
1340.09 - 1000
340.09
This gives a profit on your forex trading of $340.09
Example 2
Imagine you begin your forex trading with a balance of $2000 and you are looking to obtain a projected profit of 5% per month. To calculate the projected profits or earnings after 12 months your calculator would be as follows:
Principal (P) = 2000
Rate (r) as a decimal = 5/100 = 0.05
Time in months = 12
Add these figures into the compounding formula
A = P(1+r)^t
This gives
A = 2000 * (1+0.05)^{12}A = 2000 * 1.7958563260221
A = 3591.7126520443
A = \$3,591.71
Your profit figure at these amounts, rates and timescales is therefore Amount minus Principal
A - P
3591.71 - 2000 \\= \$1591.71 ~profit
Forex trading is a great way to look into expanding your ways of earning profits on the savings you have, but be careful to know what you are doing. Hopefully the forex compounding calculator can help you.