A performance metric that measures the profitability of an investment relative to its cost, expressed as a percentage. ROI is calculated by dividing the net profit by the initial investment amount and multiplying by 100, providing a standardized way to compare the efficiency of different trades or investments.
Example
“A trader invests $5,000 in Bitcoin at $40,000, sells at $50,000, and calculates an ROI of 25% — meaning every dollar invested returned an additional 25 cents in profit.”