Return on investment (ROI) expresses an investment’s gain or loss relative to its cost. A positive percentage indicates a gain on the stated basis; a negative percentage indicates a loss. ROI is used for crypto holdings, individual trades, and many other investments, so the calculation’s scope matters.
Calculating a simple ROI
For a single purchase and sale, ROI equals net profit divided by the amount invested, multiplied by 100. If the initial outlay is $1,000 including purchase fees and the eventual sale produces $1,200 after selling fees, net profit is $200 and ROI is 20%. This example excludes taxes and any other cash flows.
Using a current market valuation instead of sale proceeds produces an unrealized figure. The quoted value may differ from what a sale would actually recover, especially in an illiquid market.
What the percentage leaves out
Basic ROI does not account for holding time: 20% in one month and 20% over five years are different outcomes. It also does not describe volatility, potential losses, or liquidity. Comparisons require consistent costs, measurement currency, and capital basis; additional deposits and withdrawals can require a more suitable return calculation.