Excel Template for calculating IRR and NPV | Forex Factory

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Excel Template for calculating IRR and NPV

  • #1
  • First Post: Mar 24, 2008 11:46pm Mar 24, 2008 11:46pm
Is anyone using Net Present Value calculation or Internal Rate of Return calculation to compute project their forex FV? I'm hoping there are professionals who are actually doing it the way it should be done.

Can anyone help me by uploading any compounding method that utilizes IRR and effective rate of return based on their own MM.

I'm trying to re-create my table and finding it very difficult using Texas TI83 I need to get my hands on some Excel sheets.

Thanks in advance.
  • #2
  • Mar 25, 2008 1:44pm Mar 25, 2008 1:44pm
im slightly familiar with NPV and IRR from my busienss experience, but ive not seen them used in trading. how exactly are you using these concept for trading? are you trying to compare your trading returns to something else?
Relax and be happy.
  • #3
  • Mar 25, 2008 3:30pm Mar 25, 2008 3:30pm
I'm calculating the weekly ROI and comparing with previous 52 weeks average ROI to project the right percentile of equity per trade for next week.

My plan is to do it on each currency pair and compare which pairs are yielding higher or at least which pairs my strategy is giving me best return on equity.

The point is to figure out if I have same probability trade on lets say 10 pairs then which pairs I should go for based on their IRR that resulted from the strategy instead of scaling down on regular equity size to distribute to those 10 trades.

Eventually my target is to make a compounding table that will calculate the equity per trade automatically based on the 52 week's NPV. Still trying to formulate the sheet just thought if anyone tried this kind of MM before and might point me to the right direction.
  • #4
  • Mar 26, 2008 3:45am Mar 26, 2008 3:45am
Quoting im7i4z
I'm calculating the weekly ROI and comparing with previous 52 weeks average ROI to project the right percentile of equity per trade for next week.

My plan is to do it on each currency pair and compare which pairs are yielding higher or at least which pairs my strategy is giving me best return on equity.

The point is to figure out if I have same probability trade on lets say 10 pairs then which pairs I should go for based on their IRR that resulted from the strategy instead of scaling down on regular equity size to distribute to those 10 trades.

Eventually my target is to make a compounding table that will calculate the equity per trade automatically based on the 52 week's NPV. Still trying to formulate the sheet just thought if anyone tried this kind of MM before and might point me to the right direction.
I have not tried that style of MM, but I did do something similar, albeit it was done in my head based on the expectancy I saw in the trades. I hope someone comes up with this excel sheet because I know I'd be interested in it as well. If anything, I'll try and start building one, but no guarantees on a finish date.
Never underestimate the powers of the Force.
  • #5
  • Last Post: Mar 26, 2008 12:26pm Mar 26, 2008 12:26pm
Quoting im7i4z
I'm calculating the weekly ROI and comparing with previous 52 weeks average ROI to project the right percentile of equity per trade for next week.
very interesting idea

how did you come up with this? is this a ralph vince theory?? i vaguely remember reading something like this.

well i dont have the excel you are looking for, but based on the equations i think it would probably be easiest to create it yourself. thats usually the best option anyway, because you have intimate knowledge of the spreadsheet when you make it yourself.

btw, on the subject of MM, i have always stuck with the simple %R model. ive played with the more complex models, but always came back to %R because of one concept...if i have 5 systems, and one has an expectancy that is higher than the rest, why would i even take the trades on the other 4 systems? the only reason is because of diversification. and if i am trading a smaller position size on the lower expectancy systems, it will lessen the diversification effects. so i stick to the same %R on every trade, no matter the timeframe or system, and that seems to keep things running smooth. if the probabilities of any single trade are below my standards for risking the 1%, i simply dont take the trade.
Relax and be happy.
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