How to calculate daily compound interestĭaily compound interest is calculated using a version of the compound interest formula.
This is a very high-risk way of investing as you can also end up paying compound interest from your accountĭepending on the direction of the trade. This is often the case with trading where margin is used (you are borrowing money to trade).Įxamples of these types of investment include CFD trading, Forex trading, spread-betting or options for assets like stocks and shares, as well as commodities like oil and gold andĬryptocurrencies like Bitcoin and Ethereum. With some types of investments, you might find that your interest is compounded daily, meaning that you're earning interest on both the principalĪmount and previously accrued interest on a daily basis.
The interest earned from dailyĬompounding will therefore be higher than monthly, quarterly or yearly compounding because of the extra frequency of compounds. The more frequently that interest is calculated and credited, the quicker your account grows. In the next compound period, interest is calculated on the total of the principal plus the
With compound interest, the interest you have earned over a period of time is calculatedĪnd then credited back to your starting account balance.
