Calculating Returns Across Multiple Long Trades

Summary

The document distinguishes the return between two prices from the total return generated by a sequence of long positions. It asks whether adding percentage returns from separate trades gives the correct overall result and whether a charted calculation method is valid. This highlights an important accounting issue: returns across successive trades depend on how capital is allocated and how gains or losses compound, so simply summing trade percentages may not represent portfolio-level performance.

The accepted response is referenced but its formula and reasoning are not included in the supplied text. As a result, the document does not provide enough detail to verify the proposed total or explain the calculation across each price point. Any interpretation should account for position changes, timing, and the chosen return convention.

Key ideas

• A price-to-price return is calculated relative to the previous price.
• Summing separate trade returns may not equal the compounded return of a portfolio.
• The right aggregation depends on how capital and positions change across trades.
• The supplied answer reference does not include the accepted formula or its derivation.

Tags

# How to calculate return on a series of long position for each price point


# How to calculate return on a series of long position for each price point












The return between two price points can be calculated as `Price(present)/Price(previous) -1`

Or, it can be expressed as `exp(log(Price(present)/Price(previous)) -1` So, I am calculating the return for each new price like the fig shown below.

However, My confusion is with calculating return for each price point for multiple buy/sell/hold positions, as shown in example below

I have two questions?

- I think the total return for the scenario above is `(10/3 - 1) *100 + (7/6 -1)*100 = 250 %` am I correct with that number?

- I came across a scenario where the return was calculated like the figure shown below, is this method correct ? if yes, can you explain, if no, can you provide the correct way to calculate ?

## Answer by souparno majumder (score 2, accepted)

https://quant.stackexchange.com/a/69006

The return for each price point on multiple buy and sell can be calculated with the following formula shown below.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.