How to calculate account performance

Discussion in 'Risk Management' started by trade2live, Mar 10, 2010.

  1. What's the best way to calculate performance when you make regular withdrawals from your account (and deposits as well) ?

    My statement shows performance according to various measures (time weighted return ,IRR) but I don't see them as accurate especially since it's calculated over a period of less than a year, in the end I am interested in a cash on cash return measure. How much I made vs total capitalr held in the account.

    Given that over the year I make several small withdrawals generally of similar amounts and spaced more or less equally in time, I have used this formula :

    (Ending equity - starting equity + total withdrawals ) / Starting equity

    Is this a fair and roughly accurate representation of an account performance given the above assumptions ?
    What do you use to calculate your performance in a professional way?