Returns when you deposit / withdraw

Why this method is needed

If you just took "ending balance − starting balance", every deposit or withdrawal would skew your return — even when the Alpha's performance didn't change. To reflect how well the Engine actually traded, AlphaSet uses time-weighted return (TWR).

How TWR works

AlphaSet splits time into sub-periods, with each deposit/withdrawal as a break point. It calculates the return for each sub-period, then multiplies those returns together. This way, cash flowing in or out doesn't affect the performance figure.

TWR = (1 + r₁) × (1 + r₂) × … − 1

Worked example

Same Alpha, same performance, but two people with different cash flows:

• Alice puts in $1,000 in month 1, gains 10%. In month 2 she adds $2,000, gains 5%. Ending balance: $3,255.
• Bob also puts in $1,000 at the same time, gains 10%. At the end of month 1 he withdraws $100 to take profit. In month 2 he gains 5%. Ending balance: $1,050.

Their ending balances differ, but the Alpha's performance is identical. TWR must reflect that:

TWR = (1 + 0.10) × (1 + 0.05) − 1 = 0.155 = 15.5%

Both see 15.5% performance, matching the Alpha's true performance — undistorted by deposits or withdrawals.

🖼️ [IMAGE PLACEHOLDER] A two-timeline diagram (Alice & Bob) split into two sub-periods (+10% / +5%), with different deposit/withdrawal arrows, but the same TWR = 15.5% result.

What this means for you

• The % return on your dashboard reflects the quality of the Engine's trading, not how much you deposited or withdrew.
• Adding or removing funds does not "break" your performance history.
• If a displayed return looks "wrong", it's usually because you're reading absolute balance instead of TWR. See "Returns look wrong".

Frequently asked questions

I added funds — why didn't my % return jump up? That's by design. A deposit raises your absolute balance but does not raise your % performance — TWR separates cash flow from performance.

Does withdrawing reduce my recorded returns? No. Withdrawing does not lower the % performance in your history.