Return / Size (Average Return per Unit)

Definition
The average dollar amount of profit or loss generated per unit (shares, contracts, etc.) of the traded asset.

Formula
Return / Size = (Total Return $ on All Trades) / (Total Number of Units Traded)

Examples
Stocks Example

• Total Profit/Loss: $500
• Total Shares Traded: 200
• Return / Size: $500 / 200 = $2.50 per share

Forex Example

• Total Profit/Loss: $300
• Total Lots Traded: 5
• Return / Size: $300 / 5 = $60 per lot

Futures Example

• Total Profit/Loss: -$250
• Total Contracts Traded: 2
• Return / Size: -$250 / 2 = -$125 per contract

Key Points

• Scalability: Helps you assess the potential profit or loss when scaling up or down your trades in terms of shares, contracts, or units.

Considerations

• Unit Size: This metric varies depending on the asset class. Be sure to calculate it using the appropriate units (shares, contracts, lots, etc.) for the market you trade.