Commonly denoted as ROI, this is a measure of profitability on an investment, typically expressed as a percentage gain on the original capital commitment.
A common measure of an investment's success, the ROI metric is simple and intuitive.
It is calculated by dividing your total profit by your total cost and then multiplying the number by 100 to convert it into a percentage.
So if you invest $10 and gain $5, your ROI is 5/10 x 100 = 50%.
On the other hand, if another asset gives you a profit of $7 for an investment of $10, your ROI would be 7/10 x 100 = 70%.
Using this metric not only do market participants assess the relative performance of their positions, but also project potential profits during speculative analyses.
