How is ROI calculated?
How is ROI calculated?
23 Dec 2020, 17:19
Hi, can you help me understand how is ROI calculated for a strategy provider?
- I deposited 1 EUR to a new account
- open a position
- deposited 100 EUR
- withdraw 100 EUR
- closed the position with 2.03 EUR profit
The resulting ROI was about -72%. Then again
- open a position
- deposit 10 EUR
- close the position with 3.62 EUR profit
- withdraw 10 EUR
and the final ROI is 13.91%
I've read the TWR formula and explanation but I still don't understand how those ROI numbers were obtained. In my understanding, if you make a deposit and then withdraw the same amount, they should cancel each other without affecting the TWR.
Replies
vcfr99
24 Dec 2020, 10:22
RE:
Thank you for your answer. According to the documentation
The history of the account is divided into sub-periods, so each time a new deposit or withdrawal occurs, a new sub-period is formed. The ending of the day also forms a new sub-period.
I'm wondering if closing a position also forms a sub-period and if so, what is the "Equity at the beginning of the sub-period" for that case? Is it the "Equity at the end of the last sub-period"?
PanagiotisCharalampous said:
Hi vcfr99,
Here is the formula.
Best Regards,
Panagiotis
@vcfr99
PanagiotisCharalampous
24 Dec 2020, 10:58
Hi vcfr99,
I'm wondering if closing a position also forms a sub-period
No it doesn't
Best Regards,
Panagiotis
@PanagiotisCharalampous
PanagiotisCharalampous
24 Dec 2020, 07:45
Hi vcfr99,
Here is the formula.
Best Regards,
Panagiotis
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