So I often get asked how much % I am up since I started trading and I always respond that I cant really answer that question. They in turn ask how I dont know my % return.
The problem: The amount of capital I am using to trade with is rapidly increasing. I have 4x the buying power now than when I started.
The approach I have been using to calculate my performance has been % return on average capital deployed. I want to accurately state my % performance but it seems difficult because My buying power has been rapidly increasing and because I dont use all my buying power.
Any thoughts on what method I can use to state my % performance?
Same boat, was trying to calculate this the other day but couldn't think of a reasonable methodology other then weighting which is hard given that i can't remember how much I put into each stock and when.
tmi
I know how to do the basic % return calculation.
I trade for a prop firm. As I hit P&L hurdles my buying power gets increased but my buying power and profit do not move linearly but more exponentially. The theory is if you can make money trading 100 300 500 shares you can do the same with 1k 3k 5k shares but you must first demonstrate you have an edge with smaller share amounts.
My question: Is calculating my return on the average capital deployed a fair approach of my % return since my underlying capital. If someone has a better approach I would like to know because something just doesnt seem practical the way I am doing it.
"Oh the ladies ever tell you that you look like a fucking optical illusion" - Frank Slaughtery 25th Hour.
At my last gig, client accounts would have massive swings in notional value (managed options accounts). But, as qwertyater was saying to some extent, if you did the basic % return calculation at each buying power level and then compounded said, it should give you a capital-independent cume return.
The only caveat to that is, if I'm reading you correctly, that your percentage profit actually depends on your buying power, e.g. you can make 10% on $10k but 25% on $15k? In that case I'm not sure how to approach it, total return versus average capital might be needed there.
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