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How are ROI and PNL calculated?

Return on Investment (ROI) is a ratio or percentage value that reflects the profitability or efficiency of a trade or investment. ROI can also be used to compare different types of investments or multiple trading operations.
In order to present a more accurate depiction of portfolio performance, the ROI calculation has been adjusted.

Before adjustment:

  • ROI = (Latest PNL/Latest principal) * 100%​
  • Total PNL= Margin Balance - Initial deposit - cumulative deposits + cumulative withdrawals
The old calculation method presented a problem where the portfolio ROI will be affected by deposits and withdrawals. Therefore, the actual portfolio performance is not accurately shown.

After adjustment:

Calculating the ROI with it’s Indicative Optimized Portfolio Value(IOPV) will avoid the ROI distortion caused by deposits and withdrawals.
  • ROI =(IOPV at the end of the period - Initial IOPV)*100%
  • Total PNL= Margin Balance - Initial deposit - cumulative deposits + cumulative withdrawals
*When a portfolio is created, the initial IOPV for the portfolio is 1. If deposit or withdrawals are conducted, the IOPV will be updated immediately
T : value after deposits/withdrawals
T-1: value before any deposits/withdrawals
  • When adding funds: T(IOPV) = [T(Margin Balance) - Deposit Amount)] / (T-1)(Margin Balance) * (T-1)(IOPV)
  • When withdraw funds: T(IOPV) = [T(Margin Balance) + Withdrawal amount)] /(T-1) (Margin Balance) * (T-1)(IOPV)
  • If no deposit or withdrawal occurred: IOPV at the end of the period = Current Margin Balance /Initial Margin Balance * Initial IOPV
Tips:
Portfolios that were opened from 2022-06-28 will reflect the new ROI calculation rule.
ROI is widely used in both traditional and cryptocurrency markets. However, it has some limitations. For instance, we may use the ROI formula when comparing two different trades. However, the equation does not take the time into account.