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Hi I hope you can help me it would be really appreciated, am currently facing an issue with calculating the average percentage using Time-Weighted Rate of Return.

Here is a link of what i am doing - http://www.dailyvest.com/prr/prr_calcmethods.aspx#twrr-dailyval

My issue is that if i have £1,000, which is reduced to £1 this is a loss of 99.9% and numerically speaking is -0.999 which when added to 1 will give you 0.001

I then top up £500 to the account and make 200% turning the £500 into £1500 numerically speaking this would be 2 which when added to 1 will give you 3.

My issue arises when I times them together...

0.001 x 3 = 0.003 - 1 x 100 = -99.7%

This cant be correct? this formula works perfectly as long as it doesn't go into an extreme percentage.

Please could you shed some light on this, i am not the best when it comes to this, apologies if I haven't explained it very well.

Kind Regards,

Jamie

It sounds like when the account went to 1, you added another 499 to make it 500. Right?

Since there was some added in the middle, the calculation shown is not right.

The calculation that needs to be done is to take ((£1,000 * 0.001) + £499)(1+2) = £1,500.

If I have read it correctly, the real profit is (£1,000 + £500/(£1,000 + £499) = 1

(really it is 1.000667111, which is close enough to 1 to call it 1).

In other words, you invested 1,000 + 499 = 1,499 and the value now in the account is 1,500.

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