Definition
Average Daily Profit/Loss is the average net gain or loss per trading day over a specific period.
Formula
Divide your total net profit or loss by the number of trading days in the period.
Average Daily P/L = Total Net Profit or Loss / Number of Trading Days
Examples
Example 1
- Total net profit: $25,000
- Number of trading days: 50
- Calculation: Average Daily P/L = $25,000 / 50 = $500
- Interpretation: You earn an average of $500 per trading day.
Example 2
- Total net loss: -$10,000
- Number of trading days: 40
- Calculation: Average Daily P/L = −$10,000 / 40 = −$250
- Interpretation: You lose an average of $250 per trading day.
| How It Can Be Used | Limitations |
|---|---|
| Setting daily income goals | Can be skewed by exceptional days |
| Evaluating consistency in performance | Doesn’t show variability or volatility |
| Budgeting and financial planning | May not account for non-trading days |
In Practice
Average Daily P/L helps assess the sustainability of your trading as a source of income. However, consider the variability in daily results and avoid relying solely on the average.
