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Understanding ROI in Cryptocurrency Trading

Return on Investment (ROI) is one of the most important metrics for evaluating your cryptocurrency trading performance. It tells you exactly how well your money is working for you.

What is ROI?

ROI measures the efficiency of an investment. It's expressed as a percentage showing how much you've gained or lost relative to your initial investment. An ROI of 100% means you doubled your money; -50% means you lost half.

The ROI Formula

ROI = ((Current Value - Cost) / Cost) × 100

Why ROI Matters More Than Dollar Amounts

Trade A

  • Invested: $10,000
  • Profit: $500
  • ROI: 5%

Trade B

  • Invested: $1,000
  • Profit: $200
  • ROI: 20%

While Trade A made more money, Trade B was a better investment—it generated 4x better returns on capital.

Comparing Crypto ROI to Other Investments

Historical average annual returns:

  • S&P 500: ~10% per year
  • Real Estate: ~8-12% per year
  • Bitcoin (2015-2024): ~150% per year average
  • Savings Account: ~0.5-5% per year

Note: Past crypto performance doesn't guarantee future returns. High returns come with high risk.

Annualized ROI

To compare investments over different time periods, use annualized ROI:

Annualized ROI = ((1 + ROI) ^ (365/days)) - 1

A 50% return in 6 months annualizes to 125% per year. A 50% return over 2 years annualizes to only 22.5% per year.

Calculate Your Crypto ROI

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