How to measure returns when money is added to an account
Why simply comparing balances gives wrong results when you deposit money, and how a time-weighted return fixes it.
The problem
If you start with 1,000 and later add 500, a balance of 1,650 does not mean a gain of 65%. Most of that rise is your own deposit. Any track record that compares balances without removing deposits overstates (or hides) the real result.
This matters most for small accounts that are topped up often, which is exactly the situation of many crypto traders.
The fix: time-weighted return
A time-weighted return measures each day on the money that was in the account that day, then chains the days together. A deposit changes the base for the next day but does not count as profit.
Example: day one the account grows 2%, then you add money, day two it grows 1%. The chained result is 1.02 x 1.01 = 1.0302, so +3.02%, no matter how large the deposit was.
What we also show
Next to the chained result we show a net result on all money added: current equity compared with the equity at the chart start plus deposits added since. It is simpler and includes everything, so the two numbers can differ. Both are on the home page.
The exact rules and the limits of our data are on the method page.