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Time-Weighted Return (TWR)

Time-weighted return measures your trading performance independent of when you deposited or withdrew cash. It splits the equity curve into sub-periods at each cash flow and chains their returns, so adding money mid-stream neither flatters nor penalises the figure. It is the honest headline return.

Formula 

r_i = (end_equity − flows_i) / begin_equity − 1
TWR = Π(1 + r_i) − 1

Worked example

Start $10,000; +$2,000 (→ $12,000); deposit $4,000 (→ $16,000); +$1,600 (→ $17,600).

Sub-period 1 return $12,000 / $10,000 − 1 = +20%
Sub-period 2 return $17,600 / $16,000 − 1 = +10%
TWR (1.20 × 1.10) − 1
Result 32.00%
Why it matters

Simple return (P&L ÷ starting balance) is distorted by deposits — a big mid-period deposit makes a fixed dollar gain look like a smaller percentage. TWR neutralises that timing so you can compare honestly.

Common pitfalls

TWR differs from simple return whenever capital is added or removed mid-series — here simple return is 36% but TWR is 32%. Neither is “wrong”; they answer different questions.

How TradeJournalOS shows it

Reported as the headline return on the equity curve, computed by chaining sub-period returns split at every deposit and withdrawal in your cash ledger.

Create a free account to see time-weighted return (twr) on your own trades.

Related metrics
Maximum Drawdown Recovery Factor Sharpe Ratio

Frequently asked questions

Why is my TWR different from my simple return? +

Because you deposited or withdrew cash during the period. TWR removes the effect of that timing; simple return (P&L ÷ starting balance) does not.

Does TWR include my deposits as profit? +

No. Deposits and withdrawals change your balance but are removed from the return calculation, so only trading performance is measured.