ROE stands for return on equity. In leveraged trading, it is often used for a position’s profit or loss as a percentage of a defined margin basis. The exact denominator must be checked; a position percentage is not necessarily the return on the entire account.
A denominator changes the percentage
Under a simplified convention, ROE equals PnL divided by margin, multiplied by 100%. If profit is 20 and the margin basis is 100, ROE is 20%. With the same profit and a margin basis of 200, it is 10%. These examples exclude fees, funding and other adjustments.
Changing leverage can change the margin used in a displayed return calculation without changing the absolute PnL of an unchanged position. A larger percentage therefore does not necessarily mean more money was earned.
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Platforms may use labels such as ROE, ROI or PnL percentage with different definitions. Check whether the numerator is realized or unrealized, which price values it, and whether costs or fee reserves are included.
A position’s ROE also does not measure drawdown, liquidation distance or the risk taken to obtain the result. It is a return ratio whose meaning depends on its inputs.