Whats my Return?

[ffsear]

I not sure what is the correct way to express my return on my trading account.

I trade a £60,000 account. And in a 6 month period I have made a profit on the account of £32,000

So that would suggest that 32,000 / 60,000 = 0.53 * 100 = 53% return.

However……

During that 6 month period I have made 163 trades and I always risk exactly £1,000 on any 1 trade, so in theory I have risked £163,000.

That would suggest that my return is 32,000 / 163,000 – 0.19 *100 = 19%

So which is it?

53% OR 19%

 

[Hoggums]

53% ROI. £163k doesn't relate to anything that exists.

Besides 53% will make you feel better about yourself.

I take it that you now have 92K in the account - or have you withdrawn the profits?

 

[advfntrader]

thats good going in 6 months. you trade off daily charts ?

 

[ffsear]

Hi,

I trade of 1hr charts, but use daily to check for major s/r levels.

 

[BSD]

53% ROI. £163k doesn't relate to anything that exists.

I'm with Hoggums.

Have a look here:

http://www.smartmoney.com/compoundcalc/

Well done btw ffsear.

 

[Omoh101]

You can calculate your holding period return: (End of Period Value - Initial Period Value) / Initial Value. So your calculation of 53% is correct.

But it is prudent to annualize this return, or determine the rate of return as if you traded over 1 year period, given a consistent, compounding rate of return.

The annualized rate of return can be calculated as ((1 + Rate of Return)^1/N) - 1.

N is the number of years which is 180/365 = 0.493150685, 1/N = 1/0.493150685 = 2.027777778

Rate of Return is the 53% which you calculated

((1 + Rate of Return)^1/N) - 1 = ((1+0.533)^2.027777778) - 1 = 1.379088407 =138%