Question on Calculating Percentages

[Godspeed108]

Hi Folks,

I need some clarification on calculating percentages. For example, when some says I made 5% on a trade today. How do they come up with that number?

Is it the profit from the trade divided by the [B][I]current[/I][/B] account size?

Is it the profit divided by the [B][I]original[/I][/B] account size?

Or is it profit divided by the margin allocated to open that trade?

I get a sense I am mixing a couple of concepts here, if anyone can give a clear response, it would be greatly appreciated. Cheers!

[The_Dark_Knight]

This is how I calculate it.

Starting daily balance $1000.00, successful trade closed out. Ending daily balance $1050.00 = 5% return on equity.

[Godspeed108]

This is how I calculate it.

Starting daily balance $1000.00, successful trade closed out. Ending daily balance $1050.00 = 5% return on equity.

That was simple! Thanks!

[Huck]

If I have multiple trades I divide my gains/losses over my account balance when I computed for my position size.

[Godspeed108]

After some thought, here is a more precise question, in stocks, if I bought, say, $5000 of Apple, and over a week it went up and I sold for $5500, I made 10% gain in that investment.

How do you calculate percent gain per forex trade? I see that my calculating it against my account balance, over time, if I my profits are consistent, as well as the size of lots used, the percentages will get smaller and smaller and eventually plateau as the account grows. What I want to know is for the amount I “invest” or use per trade, how do I calculate percent gain or loss? What do I measure my profits against? Thanks in advance!

[Fxmall]

P/L divided by account balance…

[jotekfinance]

Absolute # divided by beginning account balance for me. I like it simple

[Godspeed108]

P/L divided by account balance…

Got it! Thanks for the clarification.

[Fxmall]

LOL, you’re welcome and believe me, we have all had to plod through these as well…and the fact that some brokers do not even bother to host simple basic info on fx trading does not really help matters either…

[sinjon]

I am keeping a trade log in Excel that includes my investment and profit info per trade. I could add a running tally that would let me know my accumulative profit percentage regardless of the account balance and not have to worry about the effect of deposits and withdrawals or multiple accounts. Thanks for the idea. As long as you have an audit trail, you’ll always know where you’ve been and what you’ve done.

[tom82]

Hi Folks,

I need some clarification on calculating percentages. For example, when some says I made 5% on a trade today. How do they come up with that number?

Is it the profit from the trade divided by the [B][I]current[/I][/B] account size?

Is it the profit divided by the [B][I]original[/I][/B] account size?

Or is it profit divided by the margin allocated to open that trade?

I get a sense I am mixing a couple of concepts here, if anyone can give a clear response, it would be greatly appreciated. Cheers!

Trade p/l / account balnce = trade p/l %

[tom82]

After some thought, here is a more precise question, in stocks, if I bought, say, $5000 of Apple, and over a week it went up and I sold for $5500, I made 10% gain in that investment.

How do you calculate percent gain per forex trade? I see that my calculating it against my account balance, over time, if I my profits are consistent, as well as the size of lots used, the percentages will get smaller and smaller and eventually plateau as the account grows. What I want to know is for the amount I “invest” or use per trade, how do I calculate percent gain or loss? What do I measure my profits against? Thanks in advance!

Gain% or Loss% = 100 * (End Equity - Start Equity) / Start Equity

[PIPernel]

I try and keep it simple. My opening account balance was £1000. I risk 2% per trade, so £20. My account is now at £1100, so up 10%. I will keep risking £20 per trade until my account reaches £1500 (if it ever does!). I will then risk 2% of 1500, ie £30 per trade. The percentage gain should be on your account balance at the opening of that trade, as should the % risk taken. Hope that helps.

[fxfreeme]

I like the concept of “return on risked capital”. Let’s say I risk $1 on every trade. After 100 trades, I have a $50 profit using one of my trading systems. This makes my return on risked capital 50%, i.e., I risked $100 and made $50. Using this method of calculating risk/reward helps me to compare trading systems/styles without regard to account size using different trading systems across different markets.

[anon5370623]

Hi Folks,

I need some clarification on calculating percentages. For example, when some says I made 5% on a trade today. How do they come up with that number?

Is it the profit from the trade divided by the [B][I]current[/I][/B] account size?

Is it the profit divided by the [B][I]original[/I][/B] account size?

Or is it profit divided by the margin allocated to open that trade?

I get a sense I am mixing a couple of concepts here, if anyone can give a clear response, it would be greatly appreciated. Cheers!

If you think it is some important principle - then you are mistaken. I can say that I made 5% from the current amount or 7% from the original, but it won’t be of much help to me in terms of risk management. IF you are seeking a solution that’ll help you to set TP correctly, then I would suggest to go through tries and errors. Best way of learning providing max experience within a short time…

[smknyc]

Hope this helps
!% Risk
leverage 1:100
the rest is self explanatory

Screenshot 1 Reward

Screenshot 2 Risk

[Arbitrager_on_Acid]

I look at the result from each trade as a percentage of net account value. I like risking just basis points (less than one percent) at the open of a new position. I do however take a more tiered approach (so many lots per thousand in equity) rather than something more precise. This avoids the extra work of calculating position sizes all the time.