Nexus Fintrade (Beta) Help Center
  • 👋Welcome to NEXUS FINTRADE (Beta) Help Center
  • User Guide
    • 😃Getting started
      • How To Get Started?
      • How to KYC verification?
      • How to modify safety verification?
      • An Overview of Products & Features
      • How to Select Futures Trading Pairs?
      • A Beginner’s Guide to Crypto Spot Trading (Website)
      • A Beginner’s Guide to Crypto Futures Trading (Website)
  • FUNCTIONALTITIES & GLOSSARY
    • 📑LFX Trading
      • What's LFX?
      • Margin of LFX
      • How to start LFX trading?
      • Margin call & liquidation
      • Financing costs
    • 🏡Account
      • Funding Account and Trading Account
    • 🫰Multi-Assets Cross Margin
      • Benefits of Trading USDⓈ-Margined Futures in Multi-Assets Mode
      • Auto-Exchange in Multi-Assets Mode
      • Cross Margin Mode
    • 🔐Security Design
      • Securing Your Account
      • Security Tips
    • 🅱️Crypto Trading
      • Trading Glossary
        • Market Makers and Takers
        • Order Book and Market Depth
        • Position Modes
      • Spot Trading
        • Types of order on Spot Trading
        • What is spot trading?
      • Futures Trading
        • Perpetual Futures and Quarterly Futures
        • What Are Cryptocurrency Futures?
        • Differences Between Perpetual Contract and Traditional Futures Contract
        • Spot vs. Futures Trading
        • Margin vs. Futures Trading
        • USDⓈ-Margined Futures Contract Specifications
        • Liquidation Price of USDⓈ-M Futures Contracts
        • Futures Trading Risk Control
        • Leverage and Margin of USDⓈ-M Futures
        • Types of Order on Futures Trading
        • Summary of Failed Orders in Futures Trading
        • Open or Close Position in Hedge Mode
        • Go Long or Short on Futures
  • FAQs
    • 💸Withdrawals and Deposits
      • Why Hasn’t My Withdrawal Arrived?
      • What Can I Do When Withdrawal Is Suspended?
      • How To Withdraw Crypto on the Platform?
      • Why Hasn’t My Deposit Been Credited?
      • What Can I Do When I Withdraw to A Wrong Address?
      • What's the Withdrawal Fees on our Platform
      • How to Deposit Crypto to our Platform?
    • ⚖️Trading
      • What Is Multi-Assets Mode, and What Assets Does It Support?
      • How to Check My Asset Balance in Multi-Assets Mode?
      • How to Calculate Margin in Multi-Assets Mode?
      • How to Download Spot Trading Transaction History Statement ?
      • What are Market order and Limit Order Price Cap and Floor Ratio ?
      • How to Prevent Phishing Attacks?
      • How to View My Trading Activity?
      • How to Calculate Return on Investment (ROI)?
      • How to Download My Order History for USDⓈ-M, and COIN-M Futures Orders?
    • ✅Account Verification
      • Why Can’t I Receive Emails from the Platform?
      • How to Whitelist the Platform's Emails?
      • Where can I get my account verified on the website?
      • How to Register on the Platform's Website?
    • 🔓Account Management
      • How to Create a Trading Account on the Platform?
      • How to Check the Platform and Transfer Funds on Wallet Overview?
    • ⚠️Risk Mitigation
      • How to Reduce Your Chances of Getting Liquidated?
      • How to Improve Risk Management on Platform's Futures?
      • How Liquidation Works in Futures Trading?
      • How to Manage Risk and Trade Responsibly?
      • How to Calculate Profit and Loss for Futures Contracts?
    • 🔐Security
      • How to Reset Your Account Password?
      • How to Secure Your Account on the Platform?
      • How to Protect Your Account on the Platform from Scam?
  • RULES & FEES
    • 🏛️Calculation Glossary
      • Fee Structure on the Platform
      • Calculation of Commission in Spot & Margin Trading
      • Calculation of Commission in Future Trading
      • Funding Rates in Perpetual
      • Margin Level and Margin Call
      • Daily Interest Rate for Margin Trading
      • Liquidation Protocols
      • Calculation of Perpetual Margin
      • Loans and Interests
      • Leverage and MMR & IMR
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  1. FAQs
  2. Trading

How to Calculate Return on Investment (ROI)?

ROI is a tool used to determine the profitability or efficiency of an investment or trade. It can be expressed as a ratio or percentage and is useful when comparing different types of investments or multiple trading operations.

The formula for calculating ROI is straightforward and involves dividing the return (net profit) by the total acquisition costs (net cost). This can be expressed as a ratio or percentage by multiplying the result by 100. A high ROI value indicates that the investment was profitable, while a negative ROI means that the return was less than the costs.

The ROI equation can be written as (Current Value - Total Cost) / Total Cost or Net Profit / Net Cost.

In both traditional and cryptocurrency markets, Return on Investment (ROI) is a widely used metric to measure an investment's performance. For instance, if Alice purchased 100 BNB for $1,000, paying $10 for each, and the current price of BNB is $19, then Alice would have an ROI of 0.90 or 90%.

However, ROI has its limitations. It does not consider the time taken for an investment to yield returns. This means that comparing two trades based on ROI may not be accurate, as a trade with a higher ROI may have taken longer to yield returns than a trade with a lower ROI. For example, if Alice's first trade had a 90% ROI but took 12 months, it would be less efficient than a second trade with a 70% ROI but only six months.

In summary, while ROI is an effective way to evaluate the profitability of an investment and compare it with other investments, it should not be the sole factor in decision-making. The time taken to yield returns should also be considered, as a high ROI does not necessarily equate to a more efficient investment.

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Last updated 7 months ago

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