Definition
The average percentage profit or loss generated per trade over a specified period.

Formulas

• Stocks: Avg % Return = (Sum of % Returns on All Trades) / (Total Number of Trades)
• Forex: Avg % Return = (Sum of % Returns on All Trades) / (Total Number of Trades)

Example
Stocks Example

• Trade 1: Investment of $1000, Profit of $200 => 20% return
• Trade 2: Investment of $500, Loss of $50 => -10% return
• Trade 3: Investment of $2000, Profit of $100 => 5% return
• Avg % Return: (20% – 10% + 5%) / 3 = 5%

Forex Example

• Account Balance: $5000
• Trade 1: Profit of $250 => 5% return
• Trade 2: Loss of $100 => -2% return
• Trade 3: Profit of $150 => 3% return
• Avg % Return: (5% – 2% + 3%) /3 = 2%

Key Points

• Overall Performance: Provides a general picture of your average percentage-based performance per trade.

Considerations

• Investment vs. Account Balance: The percentage return calculation differs for traditional investments vs. forex trading:
  • Traditional Investments: Percentage return is calculated based on the trade’s specific investment.
  • Forex: Percentage return is calculated based on the overall account balance before the trade took place.