Definition
The percentage return on investment (ROI) for a specific trade.
Formulas
- Stocks, Crypto, Futures, Futures Options, Equity Options
- Return % = (Profit or Loss on Trade / Initial Investment on Trade) * 100
Forex
- Return % = (Profit or Loss on Trade / Account Balance Prior to Trade) * 100
Example
- Stocks
- You invest $1000 in a stock and sell it for $1200.
- Your Return % = ($200 / $1000) * 100 = 20%
- Forex
- Your account balance is $5000. You open a trade and make a profit of $250.
- Your Return % = ($250 / $5000) * 100 = 5%
Considerations
- Investment vs. Account Balance: The calculation method differs based on the asset class.
- Gross Return: This metric represents the return before factoring in commissions, fees, and swaps.
