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Thread: Working out ROI when trading?

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    Veteran jackhulk's Avatar
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    Default Working out ROI when trading?

    Hello

    I'm trying to work out what figures I should be using to work out ROI when trading? Should I use actual trading stake OR stop loss amount (which is double of trading stake)?

    Thank you

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    Director of Automated Solutions 1/4 of a millionaire fund's Avatar
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    Just use your matched stakes, if the stop loss is triggered surely that will affect the overall pnl used in the roi calculation, If it's not matched/triggered why would you need to include it.

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    I thought to include it as that's the true total amount of my investment, and if I don't include it that will flatter ROI surely?

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    I'd only ever treat it as invested once it was matched, and then it'd come into your figures anyway.

    I place plenty of speculative bets during the day that never get matched but I wouldn't put them into any ROI or other calcs

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    Sorry I should clarify that when I say stop loss, I mean the amount at which I will cut my losses over many trades not just one, so everything has been matched (not speculative). For example if trading tennis and my red reaches double that of original stake, then I will cut my losses. So investment is always potential double of original stake. As I can potentially loss double stake, that is total invested and then surely ROI should be based on that?

    However, losing double stake is rare, it's just a max I set for worst case scenario (John Isner and Nicolas Mahut no.1 example).

    Don't get me wrong, I'm MORE than happy to base ROI like you say on actual stake, but want to make sure that is correct as don't want to flatter results?

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    I don't think ROI is a good figure to work with as a trader. It maybe good for someone that makes a lot of straight bets, but when you are trading and have let's say a £500 bank, you can turn this over many times and could place £5000 worth of bets on one market. How would you calculate ROI then? By market, or each trade? Would you take into account the Back and Lay, would the Lay be included as Stake or Liability?
    I would prefer to use percentage growth on my account rather than ROI.

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    Quote Originally Posted by doubleback View Post
    I don't think ROI is a good figure to work with as a trader. It maybe good for someone that makes a lot of straight bets, but when you are trading and have let's say a £500 bank, you can turn this over many times and could place £5000 worth of bets on one market. How would you calculate ROI then? By market, or each trade? Would you take into account the Back and Lay, would the Lay be included as Stake or Liability?
    I would prefer to use percentage growth on my account rather than ROI.
    I kept track of my ROI, or version of it, just by comparing the pnl as a percentage of my matched totals for back bets. I did consider taking into account all matched stakes but as all bets were traded and closed with lay bets didn't see much point in adding those up too.

    It was pretty much automated using the account history csv files so never took up much time but can't say it was really any use to me or revealed anything so didn't keep it up for too long.

    I think after a while you pretty much know what you're doing right or wrong from the day to day trading. Looking at stats really won't tell you what you're doing right or wrong and you just have to accept your own ROI take from the market, trying to force it higher is more likely to reduce your profitability rather than increase it. We all hit some optimum/maximum % take from the market and you just have to accept that or increase stakes if possible rather than try to increase your performance %.

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    I think a lot of people confuse ROI with POT, here in Aus we use POT more often with standard bets calculating outlay divided by profit.

    Example
    Outlay 10 bets of $100 = $1000
    Return $1300 = $300 profit
    POT $1000/$300 = 30%

    I think this would be hard with trading because of all the calculations and ROI would be best.

    The question is do you consider your ROI as your total bank or just your initial stakes?

    If you work it out on your whole bank you could just add the days profit or loss as a percentage of total bank.

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    Why is ROI important? Or POT for that matter?
    Personally if I make 1k on a market, I don't care if I have turned over 1k, or 100 million. 1,000 bucks is still 1,000 bucks.
    I have been doing this 7 years and at no point has working out the ROI ever crossed my mind. I am not sure of the relevance. I either end up in profit for the day, or loss, but as long as the graph points up long term, the rest is meaningless.

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    This is my reasoning why ROI or POT is important to me.

    When i first started with betting on the races i used to bet what i had in my pocket, then i started to learn about banks and such and decided to get a bank together and started to bet percentage of bank.

    Now if i look back at what i used to bet say $200 on a Saturday and i ended up with $220 i would know i made 10%

    Now if i invest $10000 and get back $10800 this is only 8% so i know i am making less money.

    If i want to try and make a constant amount each week i know the level of investment needed to get this amount.

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    What you just described is a percentage increase in your bank, and has nothing to do with ROI.

    ROI = ( Profit / Amount invested) x 100

    If you let's say outlay $500 in a day's betting and profit $100 your ROI would be:
    ROI = (100/500) x 100 = 20%

    Depending on your trading style this figure is largely irrelevent.
    For instance, by turning over my bank a number of times, taking a tick here, giving one back there and so forth before a race, I would often turn over between $500 -$1000 to make as little as $1-$10 a race. To calculate to ROI on this would provide me no information to help me profit in the future.

    The only records I keep are my profit for the day (sometimes a loss) and the number of races I trade. This gives me a figure for profit per race which I believe to be a more useful stat.

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    I guess it is just my confusion between the 2 terms i always thought there was a difference but i guess they are the same.

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    Yeah with Lonhro here. Just because you start with 200 and end with 220 doesn't mean your ROI is 10%.
    I could take your 200 dollars, lay something at 1.01 for 20,000, then trade out at 1.01-1.02 to profit 20 dollars. I certainly haven't made 10% from the trade, 40k worth of bets for 20 dollar profit. And believe me, I have done very similar. I think I had a 50k lay bet in and ended the market 50 dollars in profit.

    At the end of the day, the only thing of real importance, is bankroll management. If you don't have that, it doesn't matter what you wish to make per week, you will end up losing the lot.
    Not sure how other people go with consistancy, but I would suggest that most aim to simply make the most of their opportunities, rather than a figure for the week. It all averages out, and the more you put into the market, the less proportionate your profit margin will be anyway. You can say I make 10% of my bank per day using a bank of 200, but that doesn't mean you will make 200 a day using a bank of 2000.

    As for your "making less money" reference to your 220 vs 10800, I would take the 800 profit @ 8% over the 20 bucks at 10% any day of the week.

    As far as I am concerned, those 2 terms are used by system sellers, and straight out punters only. Used by system sellers to represent a steady investment stream comparing with stocks and other more legitimately seen ventures, and punters to confirm they have a long term edge. For traders, all you need to know is your money management is sound, and you are making a profit. The rest is of little relevance.

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    I've been using the Mind Games - Result Summary Spreadsheet for some time, it's easy to use and you can add Betdaq data on there as well.
    I am in no way connected to Mind Games, there is a nominal charge (2 quid, I think) and hope TG doesn't mind me posting this.
    It's a useful spreadsheet, although there must be other free ones out there.

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