Profit formula?



  • Just wondering what is the best formula most people use to calculate their overall profit. Any help would be much appreciated. Cheers



  • (Withdrawals + portfolio balance + cash balance) - deposits



  • And then to calculate your ROI:

    Profit divided by deposits, then multiplied by 100.



  • Cheers mate



  • 48.5% ROI since May 2017. Not too bad i suppose.



  • In my view, there is no point calculating profits without deducting commission. In my profit and loss spreadsheet I calculate the amount of expected commission (portfolio balance x 0.02) and then deduct that from the formula provided to you earlier in this thread.

    I also find it useful to restart my spreadsheet each month (archiving the historical data) so that I can calculate my ROI on a monthly basis.



  • @playingcards1 said in Profit formula?:

    And then to calculate your ROI:

    Profit divided by deposits, then multiplied by 100.

    Which works fine if its a one-off deposit.

    However, what about if you put 10k in and make a profit of 5k (so a 50% ROI) but you then withdraw 5k. What is your ROI then ? You have net deposits of 5k and a profit of 5k but it would be misleading to say 100%.



  • @mike778

    Wouldn’t my first formula already account for that? I don’t think withdrawals actually makes any difference; you just need to use total actual deposits rather than the net deposits.

    Profit (5,000) divided by deposits (10,000) = 0.5. Multiplied by 100 = 50% ROI.



  • I am rubbish at this part,so how do you calculate ROI if you deposit gradually,for instance you deposit 1000,make 100 you have 10% ROI,but if you deposit 100,make 100 an then deposit another 900 is your ROI 100% or 10%?.Is there a formula for working this out or are most traders basing it on their final deposit amount?.



  • @Twitcher said in Profit formula?:

    I am rubbish at this part,so how do you calculate ROI if you deposit gradually,for instance you deposit 1000,make 100 you have 10% ROI,but if you deposit 100,make 100 an then deposit another 900 is your ROI 100% or 10%?.Is there a formula for working this out or are most traders basing it on their final deposit amount?.

    Yes. Divide your total profits (100) by your total deposits (1900). Which should give you something like 0.052. Multiply by 100 and your ROI is 5.2%.



  • @playingcards1 Hi thanks for reply ,I should have made it clearer,in both cases I deposit 1000,but in the first instance its in one deposit,the second is a deposit of 100,an then another 0f 900.



  • At this point though it all becomes a bit meaningless ...

    Lets say you invest 10k and after 6 months you make 5k giving you a ROI of 50%. So you think, I will put in another 10k. My ROI drops to 25%. What does that tell you ? Your ROI has dropped by half, have you become less profitable ? No - you have just invested in more money.

    Once you start putting in money over time and withdrawing and so on, it really isn't worth worrying about an overall ROI as its not telling you anything worthwhile.



  • @mike778 yeah that's what I was thinking,people are comparing their ROI against others when there are a few variables to take into account. Just wasn't sure if there was a way of accurately calculating it?.



  • I'm somebody who doesn't use this site seriously (I put £50 in a couple of months ago and haven't deposited or withdrawn since) but I think I might have a solution for ROI.

    ((((Account balance + (account value x 0.98) ÷ net deposit level 'a') x days the net deposit has been at level 'a')
    plus
    ((Account balance + (account value x 0.98) ÷ net deposit level 'b') x days the net deposit has been at level 'b')
    plus
    (The same formula but for deposit level c)
    etc)
    ÷
    Total number of days in the time period covered)
    x 100

    The key element of this formula is recognising that the length of time you are at each level of investment, not just the overall deposit level, matters. The opportunity cost of holding that money in here for that period of time, and so on.

    There's a strong chance I've made an error - I haven't trialled the formula - but I like to do this sort of maths in my spare time, so it might be useful!


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