Strategy Profit indicators and how they're calculated
Let’s take a look at the 2 main Strategy Profit indicators and how they're calculated - Total Profit % and Today’s Profit %.
Total Profit %
In the simplest case**,** Total Profit % indicator reflects the percentage change of the Manager's Equity - if the manager didn't deposit to or withdraw funds from the Strategy account.
However, if there were Deposits/Withdrawals made by the manager to/from the Strategy, they would also affect Manager's Equity of the Strategy. In this case, Total Profit % is calculated as a compound percentage of all separate Profit or Loss percentages of all periods between one deposit/withdrawal to the next one.
Change of Manager’s Equity is NOT an Indicator of Strategy Performance
It is important to note that Manager’s Equity of a Strategy may change due to deposits or withdrawals of funds from the Strategy by the Manager, without any trading. Such deposits or withdrawals do not affect profitability (Profit %).
A Strategy’s Profit % may change only as a result of Manager’s trading activity, either profitable or unprofitable.
A deposit by the Manager to the Strategy will increase Manager’s Equity but won’t change Profit % of the Strategy. Similarly, a withdrawal of funds by the Manager will reduce Manager’s Equity but won’t change Profit % of the Strategy.
This explains why you may see, for example, a significant increase or decrease of Manager’s Equity that seems not to be reflected in Profit %: this would indicate that the Equity change was due to moving funds to/from the Strategy, NOT due to trading.
The following examples elaborate on different scenarios of deposits, withdrawals, and trades by a Manager in a Strategy:
Example 1: Deposits Don't Change Profit %:
Consider a Strategy with the following indicators:
Initial Manager’s Equity: 1.0 BTC
Current Manager’s Equity: 1.5 BTC
Profit %: 50%
📥 If the Manager deposits 0.5 BTC to their Strategy:
Manager’s Equity will increase: 1.5 ↗ 2.0 BTC
Profit % will remain at: 50% ➡ 50%
↔️ Thus the deposit wouldn't change Profit %. 📈 However, you will see an increase in Manager’s Equity upon the deposit.
Example 2: Withdrawals Don't Change Profit %:
Again, lets consider a Strategy with the same indicators as in Example 1:
Initial Manager’s Equity: 1.0 BTC
Current Manager’s Equity: 1.5 BTC
Profit %: 50%
📤 If the Manager withdraws 0.5 BTC from their Strategy:
Manager’s Equity will decrease: 1.5 ↘ 1.0 BTC
Profit % will remain at: 50% ➡ 50%
↔️ Thus the withdrawal wouldn't change Profit %. 📉 However, you will see that Manager’s Equity reduced upon the withdrawal.
Example 3: Change of Manager's Equity alone isn't an indicator of increase of Profit %
The following example along with an explanation would be useful for Strategy Managers who want to understand how their Strategy Profit % would be affected by their deposits and withdrawals.
In this example:
A Manager created a Strategy with an Initial Equity of $100. 📈 They made a profit of $50 (+50%): the Strategy's Equity became $150.\
📥 The Manager then deposited an additional $100, bringing the Equity to $250. 📈 After this, the Manager earned an additional $50 in profit. However, this $50 profit was made on top of the Equity of $250 after the last deposit, thus it was a 20% profit. Compounded with (not added to!) the previous 50%, the Total Profit % became 80% — see calculations in the table below.\
📤 The Manager then withdrew $200 from the Strategy, leaving it with $100 Equity. 📉 They further suffered a loss of -$50 or -50%. Compounded with (again, not added to!) the previous +80%, the Total Profit % became -10% — see calculations in the table.
Deposit (+) or Withdrawal (-) | Equity after D/W | P/L in the selected period | Total P/L, $ | Profit % in the selected period | Compound Product | Total Profit, % |
1.Initial Equity: $100 | $100 | +$50 📈 | +$50 | +50% | 1.5 | +50% |
2.Deposit: +$100 📥 | $250 | +$50 📈 | +$100 | +20% | 1.5*1.2=1.8 | +80% |
3.Withdrawal: -$200 📤 | $100 | -$50 📉 | +$50 | -50% | 1.8*0.5=0.9 | -10% |
It is important to note that in this example the Total Profit earned was +$50 (positive), but Total Profit % was -10% (negative).
If you're a Follower and need to understand the profitability of your Following - ignore the Strategy Manager's Equity and pay attention to your Profit % of the Following in your Portfolio.
Today's Profit %
Today’s Profit % indicator reflects the change in Equity since the start of the current day (as opposed to the change of Initial Equity).
Example 4:
A Strategy manager allocated $100 toward his Strategy. This is the Initial Equity.
The Strategy manager has traded for some time and has made a $60 profit (60%). The Equity of the Strategy has already grown from $100 to $160. The Total Profit % = 60%
The trader decides to trade again and makes a $5 profit bringing their Equity to $165.
The $5 increase in Equity from $160 to $165 will result in:
Increase of initial $100 Equity by $5 = 5% increase of Total Profit %
Increase of today's Equity by $5 from $160 = 3.12% increase in Today's Profit % (because $5 is 3.12% from $160)
Based on the information above, when reviewing Strategy statistics it is important to keep in mind that Total Profit % and Today's Profit % are different indicators the value of which will differ from one another based on numerous factors:
Initial Equity of a Strategy
Deposits to a Strategy
Withdrawals from a Strategy
Equity changes due to realized and unrealized P/L, trade fees and overnight financing
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