Home
Back
ARR Formula:
| From: | To: |
Annual Recurring Revenue (ARR) in forex trading represents the predictable yearly revenue generated from trading activities. It's calculated by multiplying the average trade profit by the number of trades executed per year, providing traders with a clear picture of their expected annual earnings.
The calculator uses the ARR formula:
Where:
Explanation: This simple multiplication gives forex traders a clear estimate of their expected annual revenue based on their trading performance and frequency.
Details: Calculating ARR helps forex traders set realistic profit targets, evaluate trading strategy effectiveness, plan for growth, and make informed decisions about capital allocation and risk management.
Tips: Enter your average trade profit in USD and the number of trades you typically execute per year. Both values must be positive numbers for accurate calculation.
Q1: How accurate is ARR for forecasting forex profits?
A: ARR provides a baseline estimate but actual results may vary due to market volatility, changing trade frequency, and fluctuating average trade values.
Q2: Should I include losing trades in the average?
A: Yes, the average trade should reflect your net profit/loss per trade, including both winning and losing trades for an accurate ARR calculation.
Q3: How often should I recalculate my ARR?
A: Regular recalculation (quarterly or monthly) is recommended as trading performance and frequency may change over time.
Q4: Does ARR account for trading costs?
A: Your average trade value should already be net of all trading costs (commissions, spreads, etc.) for an accurate ARR calculation.
Q5: Can ARR help with risk management?
A: Yes, by understanding your expected annual revenue, you can better determine appropriate position sizing and risk per trade.