What Is Monthly Return
Monthly return is the difference between a trader’s net worth at the beginning and end of the month, accounting for any withdrawals or deposits made during that time.
It is generally expressed as a percentage change relative to the starting balance, making it easier to compare performance across different months or account sizes.
Why Monthly Return Is Tracked
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Performance review — gives a regular checkpoint for evaluating a trading strategy.
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Comparability — allows traders to compare results across different months or strategies on a like-for-like basis.
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Risk assessment — large swings in monthly return, positive or negative, can highlight how much risk is being taken on.
What Monthly Return Does Not Tell You
As a reminder, a single month’s return does not reflect the consistency or risk taken to achieve it. Two traders could report similar monthly returns while taking very different levels of risk, so monthly return is best reviewed alongside other performance and risk metrics, not in isolation.
A Simple Example
If an account begins the month with 10,000 units and ends at 10,600 units, with no deposits or withdrawals in between, the monthly return would be 6%. If the trader had also withdrawn 200 units during the month, that amount would typically be added back before calculating the percentage change, so withdrawals are not mistaken for losses.
Looking Past a Single Month’s Number
Tracking monthly return consistently over time tends to be more informative than focusing on any single result. Past performance, including past monthly returns, is not indicative of future results.
Risk Warning:Trading CFDs involves significant risk and may not be suitable for all investors. Losses can exceed your initial deposit. Please ensure you fully understand the risks involved before trading.
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