How To Calculate Return On Invesment (ROI)

Last week we looked at why it was good to use ROI rather than profit to determine whether a certain set of selections are working well. If you haven’t had a chance to read it then you can take a look here. This week I would like to show you how to calculate ROI. If you find maths a scary subject then please don’t worry. I can promise that you will be very happy when you learn how easy it is.

In order to calculate the ROI you will need to know a few pieces of information. You will need to know how much has been bet and how much has been returned. I think that it is important to clarify what we mean by how much has been returned. This is because depending on who is doing it the ‘return’ from a bet may or may not include the stake money.

Officially ‘return’ means the amount of money including the stake that you get back from your winning bets. If you bet £10 at odds of 2.0 then your return would be £20. Of this £20, £10 is what you bet and you have made a £10 profit.

We are actually only interested in the profit your bets have made not the return.

Here is the ROI calculation:

Profit Made divided by Amount Staked  = Return On Investment (ROI)

That’s it! It really is that simple!

Over the last month we may have placed £1000 in bets. At the end of month we work out our profit and we have made £450 in profit. In order to work out the ROI we do…

£450 divided by £1000 = 0.45

Our ROI is 0.45. To make this easier to read we want to turn it into a percentage. Doing this is simply a case of multiplying our ROI by 100.

0.45 multiplied by 100 = 45%

We have made a 45% ROI. Not bad going!

It is as simple as that. Now that you know how easy it is to calculate a ROI figure I suggest that you start doing this with the selections you are following.

Next week we are going to look at how you can use ROI and Profit together to find which selections are the best to both minimize your risk but maximise your profit!

Michael Wilding

Michael started the Race Advisor in 2009 to help bettors become long-term profitable. After writing hundreds of articles I started to build software that contained my personal ratings. The Race Advisor has more factors for UK horse racing than any other site, and we pride ourselves on creating tools and strategies that are unique, and allow you to make a long-term profit without the need for tipsters. You can also check out my personal blog or my personal Instagram account.
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