Convert your trading performance over any period into a standardized annualized return (CAGR) for easy comparison.
A raw return figure is almost meaningless without a time frame attached to it. "I made 30%" sounds impressive until you learn it took five years — or unremarkable until you learn it took five weeks. Annualizing solves this by converting any period's performance into the equivalent steady yearly rate, known as the Compound Annual Growth Rate (CAGR). It is the universal yardstick that lets you compare a three-month trading run against a two-year buy-and-hold, or your results against a benchmark like the S&P 500, on equal terms.
CAGR is a compounded figure, not a simple average, which is what makes it honest. It answers the question: at what constant annual rate would my starting balance have to grow to reach my ending balance over this exact period? Because it compounds, a strong return earned over a short window annualizes to a very high CAGR — reflecting the fact that, sustained, it would snowball. That same property is a warning: a blistering short-term CAGR is rarely repeatable for a full year, so treat extreme annualized numbers from small samples with caution.
For traders, the most useful habit is to annualize every reporting period and compare it honestly to a passive benchmark. If your active trading is not beating what you could earn by simply holding an index fund — after accounting for the time, stress, and risk involved — that is vital information. CAGR turns vague feelings about performance into a single, comparable number you can act on.
CAGR (Compound Annual Growth Rate) is the rate at which an investment would have grown if it grew at a steady rate annually. It's the standard way to compare trading performance across different time periods.
Formula: CAGR = (End Balance ÷ Start Balance)^(1 ÷ Years) − 1
For example: $10,000 growing to $14,500 in 6 months is a 45% total return — but annualized it represents approximately 110% CAGR, since the growth rate would compound over a full year.
The S&P 500 averages ~10% annually. Consistently achieving 20–30% annually puts you in the top tier of active traders. Anything above 50% annual is exceptional and typically involves significant risk.
Annualized return allows fair comparison between strategies with different time periods. A 50% return in 3 months is far better than a 50% return in 3 years — CAGR shows this difference clearly.
No. Annualizing a few good weeks projects that pace across a full year, but markets rarely cooperate that consistently. A 200% CAGR derived from one strong month is a mathematical extrapolation, not a forecast. The longer the measurement period, the more trustworthy the CAGR — use at least a full year of data before drawing firm conclusions.
This calculator assumes a single starting balance and a single ending balance with no cash added or removed in between. If you deposited or withdrew funds during the period, those flows distort the result — you would need a time-weighted or money-weighted return to measure performance accurately. For a clean trading-account comparison, use the balances at the start and end of an untouched period.
Once you can annualize, the next step is context. Compare your CAGR to a relevant benchmark — for most traders that is a broad index such as the S&P 500, which has historically returned roughly 10% per year. Beating it consistently, after costs and adjusted for the extra risk you took, is the real test of whether active trading is worthwhile for you. Many traders discover that a steadier, lower-CAGR approach actually compounds to more wealth than a volatile high-CAGR one that suffers deep drawdowns.
Pair this calculator with the Compound Growth Calculator to project where a sustained CAGR leads over time, the Drawdown Recovery Calculator to weigh the risk behind the return, and the Expectancy Calculator to confirm the underlying edge that produced it. A return number only means something when you know the risk and consistency that came with it.