CAGR Trading Return Calculator
Calculate Compound Annual Growth Rate for multi-year trading portfolio returns.
How the Calculation Works
Read parameters and compute total exposure: multiply order quantity by contract unit multiplier.
Evaluate terminal return at the selected target price using strict financial mathematical boundary logic.
Deduct upfront capital commitments, taxes, or net debits to produce final net profit or loss realization.
Calculation Formula
Example Calculation
₹2 Lakhs grown to ₹5 Lakhs over 3 years.
Portfolio compounded at an annual rate of 35.72% over 3 years.
Assumptions & Parameters
- Assumes capital remains invested throughout the duration without intermediate cash injections.
Frequently Asked Questions
What is CAGR in trading?
Compound Annual Growth Rate represents the constant annualized growth rate of a trading portfolio over multiple years.
Why use CAGR instead of total absolute return?
CAGR normalizes returns over time, allowing fair comparison between strategies run over different time horizons.
Does CAGR reflect volatility during the period?
No. CAGR only measures start and end values; Sharpe and Sortino ratios measure the volatility path taken.
How do capital withdrawals affect CAGR?
Withdrawals reduce the ending capital balance, lowering the calculated compound growth rate.
What is considered strong trading CAGR?
Institutional trading performance above 20% to 30% CAGR over multi-year cycles is considered exceptional.
Can CAGR be negative?
Yes. If ending capital is less than starting capital, CAGR will reflect the annualized rate of capital erosion.