The growth represents the growth of the account, calculated based on the profit percentage of all trades over a certain period of time. We can see this indicator being used a lot on the FXCE platform: growth by day, week, month...
The formula to calculate the growth of a trading account is as follows:
Growth1 = (Growth0 (1 + Profit Percentage1))-1
(Where Profit Percentage = Profit/Balance)
- Your account's initial balance is $500, Profit = 0, Profit Percent = 0.
Growth0 = [(500-0)/500*100% = 100%] - 1 = 0
- Then you place an order and get a profit of $50, your account's Growth will be calculated as follows:
Growth1 = [100% (1 + (50/500))] - 1 = 0.1
So at this time your account grows by 10% compared to the initial balance, your current balance is $550, Growth is 10%
- You place an order and get a profit of $50, your account's Growth will be calculated as follows:
Growth2 = [110% (1 + (50/550))] - 1 = 0.199
By applying this formula we will have a table below that makes it easier to visualize how your trading account's growth rate is calculated.