I'm in the process of building my trading journal, and am messing around with some hypothetical numbers to try and understand the proper way to calculate rate of return. Please see the attached screenshot. I guess my question is, how do you include deposits and withdrawals in your calculation?

In the hypothetical example in the screenshot, would you include the deposit and withdrawal in calculating rate of return?

My understanding is that I would take the total of the beginning balance, plus any deposits, minus any withdrawals. Then take the net profit (gross profit minus commissions and fees) and divide that by the total of the beginning balance, deposits and withdrawals. Am I doing this right? Am I missing anything?

Thanks

Sure, although it's very simplistic as it's not time weighting your capital (for instance, let's say you made 100% on that capital, but then at the end of the year deposited 100,000 - it would look like you didn't make very much).

Also, depending on what you are calculating, you might want to look at compound growth vs. average growth (although it shouldn't matter if you only have one holding period).

I found a series of finance courses on coursera helpful:

https://www.coursera.org/learn/portfolio-selection-risk-management (and you can checkout that whole series)

Also some stuff on investopedia:

https://www.investopedia.com/terms/t/time-weightedror.asp
https://www.investopedia.com/terms/m/money-weighted-return.asp

And:

https://www.betterment.com/resources/betterment-calculate-investment-returns/

Try this.....I think this is what you are looking for....

https://www.get-digital-help.com/calculate-your-stock-portfolio-performance-with-net-asset-value-based-on-units-in-excel/