Average Daily Profit/Loss tells you how much money you’re making or losing each day, on average, from your trading. It’s a way to see how your trading is performing day-to-day.
Average Daily P/L = Total Net Profit or Loss / Number of Trading Days
Example 1: Positive Daily Return
- 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: Negative Daily Return
- 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 |
A trader uses their average daily profit/loss to see how consistently they’re making money. If the average is positive, they’re generally making money each trading day. If it’s negative, they’re losing money. They might use this to compare different weeks or months, or to see how changes in their trading strategy affect their daily performance. It helps them understand if their trading is consistently profitable over time.
