Return on investment (ROI), rate of return (ROR)

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    Rate of returnWhat is ROI?

    In trading and finance, the ROI (also known as “rate of profit”, “yield” or sometimes just “return”) is the ratio of money gained or lost on an investment relative to the amount of money invested.

    The amount of money gained or lost may be referred as interest, profit/loss, gain/loss or net income/loss. The money invested may be referred to as the asset, capital or cost basis of the investment.

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    ROI is usually expressed as a percentage.

    The initial value of an investment does not always have a clearly defined monetary value, but for purposes of measuring ROI, the expected value must be clearly stated along with the rationale for this initial value.

    Similarly, the final value of an investment also does not always have a clearly defined monetary value, but for purposes of measuring ROI, the final value must be clearly stated along with the rationale for this final value.

    The rate of return can be calculated over a single period, or expressed as an average over multiple periods of time.

    This means that you can put an ROI on a single trade. For example, you invest $100 in a trade and get $110 back. Then your ROI would be +10%.

    You can also put an ROI onto a whole trading period. Say your trading capital is $1,000. At the end of the month, you have $1,019 on your trading account. Your monthly ROI would be +1.9%.

    Also see:

    The cost of trading forex

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