What Is Return on Investment in Trading

The same profit, three bases

A return is a profit divided by what was put in, and in trading the thing that trips people up is what counts as put in. Take the $387 made on 3 September 2026 — one lot of the euro against the dollar bought at the open and sold at the close. Against the trade's full value, 115,872 dollars of euros, it is a third of one per cent; but the trader never put in 115,872. Against the margin the broker held back, $1,159, it is 33 per cent; but the margin came back the moment the trade closed. Against the account, $5,000, it is 7.7 per cent — and the account is what was put in, so that is the return on investment.

Ten real trades as one return

A list of trades gives one return the same way. On the ten-day list — one lot bought at each day's open and sold at its close, 24 August to 4 September 2026, on a five-thousand-dollar account — four days made $918 and six days lost $1,447, a net loss of $529. Over the $5,000 put in, that is minus 10.6 per cent. The size of the trades does not enter the sum twice: it is already inside the $529, and the base is the account it was traded from.

This paper is locked