Compound growth is the process of reinvesting returns so that gains produce their own gains. Each period starts with a larger base than the one before, because profits are folded back into the portfolio. Over time, this feedback loop leads to exponential rather than linear growth.
With an initial amount \(C_0\) and a periodic growth rate \(r\), the value after \(n\) periods is \[C_n = C_0 (1 + r)^n.\] Even small, consistent gains become powerful when repeated many times.
For instance, achieving just a 1% gain each week compounds to roughly \[(1 + 0.01)^{52} - 1 \approx 0.67\] or a 67% return over a year. The key is to keep profits in the account so that each new trade works with a larger balance. Taking money out breaks the compounding effect and slows progress significantly.