Total return is a period's net P&L expressed as a percentage of starting capital. It is the only way to compare two accounts of different sizes, and it means nothing without the drawdown that came with it.
What the return measures against capital
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Total return answers a question P&L cannot handle: how much did this account earn, relative to what had to be committed? Two traders, one on $2,000 and one on $50,000, are comparable on no figure expressed in currency. They are on this one.
It is computed over a closed period, from the first day to the last, on the capital as it stood at the start of that period. It measures the arrival, not the journey: it completely ignores what happened between the two ends.
Total return = net P&L ÷ starting capital × 100
The denominator is the capital at the start of the period, not the current capital and not the average of the two.
If the account was topped up along the way, total return is no longer simply computable: you need a time-weighted return, otherwise a plain transfer looks like a performance.
Total return = 14.5%. If the year's maximum drawdown was 12%, that 14.5% came at a high price; if it was 3%, it was a very good year.
This is the original use. A gain of $800 on $2,000 and a gain of $5,000 on $50,000 compare on no figure in currency; the first is 40%, the second 10%, and the question changes completely.
It also lets you compare yourself to yourself when your account changed size. Your P&L in currency rises mechanically with capital, your return rises only if your trading improves.
A return is only judged with the maximum drawdown of the same period. 14.5% with a 3% drawdown and 14.5% with 20% do not describe the same trader.
The ratio between the two has a name, the recovery factor, and it is the simplest way to put a single figure on a whole year.
The first flaw is the deposit along the way. If capital was topped up, a percentage computed on starting capital mixes a performance with a transfer. It is the most common error in screenshots shared online.
The second is extrapolation. A month at +6% does not make a year at +72%, and a return computed over three weeks compares with no annual return. Periods are compared at equal length.
The third is a misstated starting capital. On a prop firm account whose capital is not yours, or on an account whose declared opening balance is wrong, the percentage is arithmetically right and wrong in what it tells.
The classic mistake. Computing it on capital that moved. If you topped the account up along the way, the denominator is no longer your starting capital and the percentage stops meaning anything. A deposit is not a performance, and it is nonetheless the most common error in screenshots shared online.
| Indicator | Formula | What it measures | When to use it |
|---|---|---|---|
| Total return | net P&L ÷ starting capital | The gain relative to capital | Comparing two accounts |
| Net P&L | Σ results − fees | The gain in currency | Checking against the statement |
| Maximum drawdown | worst peak → trough | The worst fall endured | Measuring the risk taken |
| Recovery factor | net P&L ÷ max drawdown | The gain per unit of fall | Judging return and risk together |
The percentage is never more accurate than its denominator. An approximate opening balance produces a return precise to the hundredth and wrong as a whole.
A return alone does not say whether the year was good. The same figure with its maximum drawdown beside it says so immediately, and it is the only honest way to share it.
If the whole year's return rests on two months, that is not the same trading as twelve modest months. The total is identical, the conclusion is not.
There is no normal figure, and be wary of anyone quoting one. What gets judged is not the return but the return / drawdown pair: 15% with a 5% drawdown beats 40% with 35%, because the second is not repeatable without blowing the account.
Both, but not for the same thing. P&L tells you how much you made, total return tells you whether that was a lot given what you committed. The second is the only one that stays true if you change the size of your account.
The simple formula no longer applies. You split the period into segments at each capital movement, compute each segment's return, then chain them. That is a time-weighted return, and it is the only method that does not count a transfer as a gain.
Not necessarily. Over a short period, chance weighs more than method: a system with positive expectancy can end a quarter in the red with nothing broken. What settles it is expectancy over a hundred trades, not the sign of a three-month return.
No, not to judge trading. Multiplying a good month by twelve assumes the next eleven will be identical, which never happens. A return compares with a return of the same length, and a year is judged on a year actually traded.
In Tradoshi, total return divides the net P&L of your trades by the account's starting capital. It sits at the top of the Track record card on the Dashboard, with the amount in currency just below, and as a percentage under the net P&L card.
Only trades enter the P&L: a deposit does not appear in it, so it cannot pass for performance. The denominator, however, stays the starting capital, and after a large deposit the percentage is read with that caveat. The same card shows monthly returns, which reveal where the year's figure comes from.
To go deeper on this: read the full guide. Every term is gathered in the glossary.