Question

I'm a stock trader. I entered and exited the market 3 times this year.

1) entered on 12/31/20 at 86.5, exited on 1/27/20 at 92.72 for a gain of 7.1%.

2) entered on 2/5/20 at 105.82, exited on 2/20/20 at 114.66 for a gain of 8.4%

3) entered on 4/15/20 at 61.55, exited on 4/30/20 at 69.77 for again of 13.4%.

How do I figure my annual growth rate.

How do I calculate my annual return based on these trades

Answer 1

(A) Annual growth rate or the XIRR of the series of cash flows is given by the formula:

The excel function XIRR gives the Internal rate of return of a series of cash flows with unequal holding periods.

Date	Amount ($)
31-12-2019	-86.5
27-01-2020	92.72
05-02-2020	-105.82
20-02-2020	114.66
15-04-2020	-61.55
30-04-2020	69.77
XIRR	378.20%

(B) The annual return is the return that an investment provides over a period of time, expressed as a time-weighted annual percentage.

Time-weighted rate of return (or the annual return) is given by the geometric means of the annualized returns of each of these trades.

Annualized return = (1+gain%)^(365/n) - 1

where n = no. of days the stock was held for

Trade	Days	Gain %	Annualized return %
1	27	7.19%	155.67%
2	15	8.35%	604.49%
3	15	13.35%	2012.14%

Time-weighted rate of return (or the annual return) = [(1+R1)*(1+R2)*(1+R3)]^(1/3) - 1