Below is forex return of investment calculator:
ROI in trading represents the benefit of an investment that is divided by the invested money cost. If the trader invested $1000 in his account, he made a $400 profit, then the return of investment in trading would be $400/$1000=0.4 or 40%.
ROI is a crucial metric in the trading world as it helps traders and investors measure the return on a particular investment relative to its cost. In forex trading, given the high volatility and leverage, understanding ROI can provide insights into trading performance and strategy effectiveness.
Detailed Explanation:
- Earnings from Investment:
- This is the amount you receive after selling your position. In forex trading, it’s the accumulated amount of your invested capital plus or minus the profit or loss you’ve made.
- Example: John sells his position for a total of $1400. Therefore, his earnings from the investment amount to $1400.
- Cost of Investment:
- This represents the initial amount you invested in a trading position.
- Example: John invested $1000 initially in EURUSD. This $1000 is his cost of investment.
- Profit or Loss:
- It’s the difference between the earnings from the investment and the cost of the investment.
- In our example: Profit = Earnings from investment – Cost of investment = $1400 – $1000 = $400.
- Calculate ROI:
- ROI is calculated using the formula: ROI = (Profit or Loss / Cost of Investment) x 100%
- From our example: ROI = (400 / 1000) x 100% = 40%
Conclusion: Return on Investment, or ROI, is a vital measure in forex trading to understand the efficiency of an investment. It tells traders how much return they’ve received relative to the initial amount invested. In the example of John, with an investment of $1000 and a profit of $400, his ROI would be 40%, indicating that for every dollar he invested, he made a return of 40 cents.
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
