CAGR Calculator — Compound Annual Growth Rate for Traders & Investors
Work out the Compound Annual Growth Rate of your trading account or investment in seconds. Choose Standard, Exact Dates, or Future Value mode — results and the year-by-year growth table update live as you type.
📊 CAGR Calculator
Adjust the inputs below — results and the growth table recalculate instantly.
| Year | Balance | Cumulative Growth % |
|---|---|---|
| 1 | $12,038.01 | 20.38% |
| 2 | $14,491.38 | 44.91% |
| 3 | $17,444.74 | 74.45% |
| 4 | $21,000.00 | 110.00% |
What Is CAGR?
CAGR — Compound Annual Growth Rate — is a single annualized figure that describes how an investment or trading account grew from a starting value to an ending value, assuming the growth compounded steadily every year over that period. Rather than showing every up and down along the way, it collapses the whole journey into one comparable number.
For traders, CAGR is a convenient way to summarize account performance across months or years of live trading, especially when comparing a strategy, a funded account, or a portfolio against other opportunities, benchmarks, or your own past results.
How Do You Calculate CAGR?
You need three inputs: the starting value, the ending value, and the number of years (N) between them. The formula is:
Worked example: an account starts at $10,000 and grows to $21,000 over 4 years.
That means growing the account by a steady 16.93% every year, with each year's gains reinvested, would produce the same $21,000 ending balance after 4 years.
Why Compounding Changes the Picture
CAGR only makes sense because of compounding — each year's return is calculated on the account's new, larger balance rather than the original starting amount. Based on your current inputs above, here's how the balance builds year by year at a 20.38% compound annual rate:
| Year | Balance | Gain vs Prior Year |
|---|---|---|
| 1 | $12,038.01 | $2,038.01 |
| 2 | $14,491.38 | $2,453.36 |
| 3 | $17,444.74 | $2,953.36 |
| 4 | $21,000.00 | $3,555.26 |
Notice that the dollar gain grows every year even though the percentage rate stays flat — that's compounding doing the work, not a change in strategy or risk.
What Are the Benefits of Using CAGR?
Accuracy
By factoring in compounding, CAGR gives a more realistic picture of account growth than simply looking at total return, which can be skewed by volatility or an unusual final year.
Consistency
Real returns swing wildly from year to year. CAGR smooths those swings into one steady, comparable annual figure, making performance easier to track over time.
Comparability
Because it's expressed as a standardized annual rate, CAGR makes it straightforward to compare accounts, strategies, or asset classes, even when their timeframes differ.
What Are the Limitations of CAGR?
Volatility
CAGR hides everything that happened between the start and end values. Two accounts with an identical CAGR can have taken very different, and very different-risk, paths to get there.
Past Performance
CAGR is entirely backward-looking. It says nothing about whether the same growth rate can be repeated as market conditions, strategies, or account size change.
Simplicity
The raw CAGR figure ignores fees, spreads, swap costs, taxes, and inflation — all of which can meaningfully change what a trader actually keeps.
External Factors
Interest rate shifts, geopolitical events, and broad market regime changes aren't captured by CAGR, which assumes a tidier world than markets usually offer.
Distribution Timing
CAGR assumes even compounding throughout the period. In reality, gains are often front- or back-loaded, which the single average rate doesn't reveal.
Comparison Issues
Comparing CAGR across very different strategies, asset classes, or risk profiles can be misleading if used as the sole metric — it oversimplifies genuinely different performance profiles.
CAGR vs. Average Annual Return
A simple average return adds up each year's percentage gain or loss and divides by the number of years. It sounds intuitive, but it can badly misrepresent what actually happened to your capital.
Consider an account that loses 50% in year one, then gains 50% in year two. The simple average of −50% and +50% is 0% — which makes it sound like the account is back where it started. In reality, $10,000 falling 50% leaves $5,000, and a 50% gain on $5,000 only brings the account to $7,500 — a real loss of 25%. CAGR captures that true outcome; a basic average does not.
What Is a Good CAGR?
"Good" depends on the asset class, strategy, and risk taken to achieve it — but these general bands are a useful starting point for traders and investors alike.
7% – 10% / year
Considered strong and sustainable over the long run — this range typically outpaces inflation and roughly tracks long-term equity market averages.
10% – 15% / year
Viewed as very good performance. Achievable with a well-tested edge, but usually requires more active risk management to sustain.
15% – 20%+ / year
Exceptional, but usually comes with meaningfully higher volatility and drawdown risk — harder to sustain consistently across many years.
Frequently Asked Questions
Related Trading Tools
CAGR tells you where an account ended up. These tools help you manage the risk and consistency that get you there.
Project period-by-period account growth using consistent returns and compounding — the mechanics behind every CAGR figure.
See how a losing streak affects your account and how much gain is needed to recover — essential context for any CAGR figure.
Calculate the exact position size for any trade based on account balance, stop loss, and risk % — the foundation of consistent long-term growth.
Work out the margin required to open and hold a position before you trade, so growth targets stay realistic.