Straight vs Cumulative Results
Signalator uses two types of long-term results: straight and cumulative. Both are valid, but they answer different questions.
Straight Results
Monthly Reset- Each month measured vs initial deposit
- No compounding effect
- Consistent baseline comparison
- Isolates monthly performance
Monthly % = (Profit ÷ Initial Deposit) × 100
Cumulative Results
Compounding- Profits/losses remain in account
- Compounding effect applied
- Real-world trading simulation
- End-to-end equity tracking
Equityt+1 = Equityt × (1 + Returnt+1)
Quick Definitions
- Straight results: monthly % results are measured versus the same base (e.g., the initial deposit) as if you "reset" each month.
- Cumulative results: profits and losses remain in the account (compounding). Each month's result is applied to the current equity.
Why Use Cumulative Results
If you invest over a longer period (3 months, 6 months, 1 year), the most important metric is often: "How much money do I have at the end compared to what I started with?"
To measure this, cumulative results assume that all profits and losses stay in the account for the entire period. No regular withdrawals, and no adding new funds to cover drawdowns.
No Regular Withdrawals
All profits remain invested for potential growth
No Emergency Top-ups
Losses are absorbed by existing equity
Compounding Effect
Growth builds upon previous growth
Real Performance
Reflects actual account evolution
Example: What "Cumulative" Means
How to Calculate Cumulative Results
Below is a simple step-by-step method. Assume: initial deposit = $1,000 and monthly returns: +3.0% +7.0% +1.5% +4.5% +15.7% +5.1%
Compounding Walkthrough
| Month | Return | Start Equity | Profit/Loss | End Equity | Cumulative |
|---|---|---|---|---|---|
| Jan | +3.0% | $1,000.00 | +$30.00 | $1,030.00 | +3.00% |
| Feb | +7.0% | $1,030.00 | +$72.10 | $1,102.10 | +10.21% |
| Mar | +1.5% | $1,102.10 | +$16.53 | $1,118.63 | +11.86% |
| Apr | +4.5% | $1,118.63 | +$50.34 | $1,168.97 | +16.90% |
| May | +15.7% | $1,168.97 | +$183.53 | $1,352.50 | +35.25% |
| Jun | +5.1% | $1,352.50 | +$68.98 | $1,421.48 | +42.15% |
| Final Cumulative Result: | +42.15% | ||||
Growth Visualization
Are Cumulative Results Always Better?
Not always. Compounding can increase outcomes when results are stable, but it can also amplify negative impact after a drawdown.
When Cumulative Excels
- Consistent positive returns
- Low monthly volatility
- Long-term investment horizon
- Reinvestment of profits
When Straight May Be Better
- High monthly volatility
- Regular profit withdrawals
- Frequent account top-ups
- Short-term evaluation
Simple Stress Test
If one strong month becomes a loss month, cumulative equity can end lower than straight results. The key variable is volatility of returns.
Key Takeaways
Straight Results
Use for comparing months on a consistent baseline. Isolates individual period performance.
Cumulative Results
Models real compounding when funds stay invested. Shows actual account growth over time.
Return Stability
Key factor determining whether cumulative outperforms straight calculations.
Strategic Application
Use cumulative for long-term assessment, straight for period-to-period comparison.