Rate of return (ROR)

Rate of return tells you whether a trade or account period made money, but it does not tell you how much risk was taken to get there. For traders, that missing piece matters.

A futures example: one trade, two views

Say a futures trade uses $1,000 of account capital and the position is structured so the planned risk is $20. That $20 is the trade’s risk unit, or 1R.

If the trade makes $120, the rate of return on the $1,000 account is 12%. In R terms, the result is +6R.

If the trade loses $20, the rate of return on the $1,000 account is -2%. In R terms, the result is -1R.

That is the clean way to read it: ROR shows the percentage result, while R shows the outcome against the risk you planned to take.

What ROR actually tells you, and what it leaves out

ROR is the gain or loss over a period, expressed as a percentage of the capital committed. A positive ROR means profit; a negative ROR means loss.

What it does not tell you is whether the trade was well managed. Two positions can post the same percentage return while carrying very different risk, which makes raw comparison misleading.

For futures traders, that is the key limit: ROR is a result measure, not a full measure of edge.

How to use it without overreading it

Use ROR as a quick check on whether a trade or period was profitable. Then compare the same result in R so you can see whether the return was earned efficiently.

That matters because a strategy’s expectancy is read in R, not dollars. A +0.35R strategy has the same edge in calm and volatile markets; the dollar result changes with sizing, not with the edge itself.

The practical next step is simple: note the ROR, then convert the trade into R before you judge it.