Maths help needed pls...

Hello everyone...

I was wondering if any of you could help me with working out the % i'm up in my trading so far, and also my equity high +%, as my maths is not what it should be! If any of you have the time it would be much appreciated (this is not to brag whatsoever, as i know only too well what it's like to be on the other side. Also relatively speaking the £ sums involved are very modest).

1st March 2010 - Started trading with funds of £9,400.

30th August 2010 - Profits take total funds to £16,582.

6th September 2010 - I add an additional £4,300 to take advantage of a drawdown, which makes my total funds £20,882.

13th September 2010 - After losses total funds stand at £17,874.

15th September 2010 - I book profits of £4,200 from trades which were taken before the new funds were added. This brings total funds profits to £22,074.

11th November 2010 - Further profits mean i reach a new (and current) equity high of £32,322.

26th November 2010 - My total funds stand at £28,846.


Where my maths falters is when the new funds are added, and profits from the original capital base are booked, as they would distort the true percentage if they're not adjusted to be given the proper weighting. I hope this all makes sense, but if you need any clarification on these numbers just let me know. Many thanks.

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Is there a standard for calculating 'true percentage' in cases like this with some sort of weighted average?

I believe:

9400-16582 : gain of 76.4%

then funds added to 20882, still 76.4% gain.

20882-17874: loss of 14.4%

so over that period you gain was (1+.764)*(1-14.4)-1=51% ish

The rest should follow from that pretty easily (I wasn't completely sure on what you booked and what you gained after that).

Thanks for your replies. Traderhotch, you put me on the right path with the workings then, think i've got it.

Take the value of the account equity (and completely ignore the balance, it is meaningless anyways). At any moment in time you can look at the account equity value and it will tell you exactly how much money you currently have in the account. From this you make your profit calculation. The account balance has no meaning for profit/loss calculations.

Could you clarify what you mean pls? Just in case you thought i was talking about open positions, all the numbers i quoted are realised profits and losses...

You should include your open positions too (which means instead of using the account balance you simply use the account equity). Then it does not matter whether positions are open or not. The Account equity will always tell you exactly how much you would have if you would close everything now without actually closing it. It tells you how much your account is worth. This gives a much clearer and much more realistic picture of what is going on and in what state your account is.

I see, thanks for your reply. That was something i always wondered, whether or not to include open positions, as my drawdowns and profitable trades can last for weeks or even months. With regard to this, using my account equity to track performance would make a lot of sense.