I might be at the lazy end of the spectrum, but the way I do it is this: look at my account size on the first day of the month. Say it is £20,000. I risk 1% per trade, every trade, so my risk per trade on that account would be £200. I trade with that same £200 risk all month, then reevaluate at the end of the month. Say I made 10% - my account size is now £22,000. So from the first day of the following month, I will risk £220 per trade. I do this every month, so effectively spend each month with a fixed risk, which then either goes up or down (if I had a losing month!) for the following month. I realize that I am leaking some efficiency, here - if I make 5% in the first week of a given month, that is not reflected in higher trading risk until the beginning of the following month - but I find that it keeps the maths simple, so I can place trades more quickly and easily. If my risk per trade changed several times a week then I might be more liable to make a mistake. Over the year it still gives me a nicely compounded account, while not distracting me from the charts/trade planning during the working month.
I agree with most of the responses thus far, which have covered your question, but I add this simply as I thought you might like a real world example of once approach to compounding.
ST