What does compounding mean?

In terms of Forex trading?

Please explain, thanks.

Example:

http://www.forexfactory.com/showthread.php?t=44083

Compounding basically means, interest paid on interest.

For example, if you borrow $1000 for a year at 5% interest, you end up paying more than $1050 because you'll be charged interest every month on the principal as well as on the interest you've already paid.

If you make 5% return for 12 months in row you have made more than 60% (12x5) return. You have made 1.05*12=1.79 or 79%. Thats compounding.

Thanks for the replies guys, solved my question.