Yes, compounding brings growth. Here is an example of 2 curves that start with only enough equity for one contract. Over time you can see the benefit of compounding.
Above is a curve from back testing in TradeStation. TradeStation outputs a report. I copy the tradelist into Excel. Then use a fomula in excel to compound the number of contracts traded.
The Excel formula considers:
1) The amount of capital for margin
2) The most recent loss or gain
3) More historic losses or gains
If the strategy is in a lossy/drawdown period, the Excel formula decrease the number of contracts traded.
If the strategy is in an equity period, the Excel formula increase the number of contracts traded.
The Excel formula can/should be adjusted to the trader's risk tolerance. I would be happy to share my risk tolerance if you would like to see it.
