This is probably one of the values you’ll be checking the most. The gain value demonstrates the progress of your trading journey and the account’s performance in relation to the investment made.
How it’s calculated?
In order to calculate your account’s gain, Myfxbook uses the Time-Weighted Return (TWR) formula. By using the TWR calculation method, we are able to determine the account’s growth and each trade’s performance without it being affected by deposits or withdrawals made mid-trade. This helps eliminate situations where risk or loss is “hidden” and situations where profits are inflated.
This is achieved by relating each trade’s profit to the balance the account had when the trade was opened, as opposed to the balance the trader has after closing the trade.
Consider the following scenarios:
A trader deposits $100 into his account, opens a trade which ends up with a floating loss of $20. Before the trader closes this trade, he deposits another $100. If we were to take into consideration the mid-trade deposit or the balance after the trade closed, the trade’s performance would’ve read -10% when in fact, the trader risked and lost -20% of his initial investment.
A trader deposits $200 into his account, opens a trade which ends up with a floating profit of $10. Before the trader closes this trade, he withdraws $100. If we were to take into consideration the mid-trade withdrawal or the balance after the trade closed, the trade’s performance would’ve read +10% when in fact, the trader profited +5% of his initial investment
TWR Formula
P – Profit
O.B – Opening balance
Let’s take a look at an example of how the formula is used to calculate the gain of the following trading account scenario:
Deposit $1000
Open trade 1
Close trade 1 with $20 profit
Open trade 2
Close trade 2 with $35 profit
Open trade 3
Open trade 4
Close trade 3 with -$40 loss
Close trade 4 with $10 profit
If we analyze the events on the left, we can determine the profit and opening balance of each trade.
| Trader number | Opening Balance | Profit |
|---|---|---|
| 1 | $1000 | $20 |
| 2 | $1020 | $35 |
| 3 | $1055 | -$40 |
| 4 | $1055 | $10 |
Notice that the opening balance for trade 3 and 4 is the same, trade 3 wasn’t closed when trade 4 was opened and its floating profits/losses did not reflect on the account’s balance yet, the account’s balance when opening trade 3 and 4 was identical. Balance is affected by trades only when they’re closed.
Now let’s insert the values into the formula to calculate the account’s gain:
