P&L calculation in MI Simulator

How is P&L Calculated in the Momentum Investing Simulator?

In momentum investing, portfolios are periodically rebalanced. When stocks are removed from the portfolio, their profit or loss is recorded as realised P&L. The remaining stocks continue to show unrealised P&L based on their current market prices.

In the Momentum investing simulator, P&L (Profit & Loss) is shown in two ways:

Realised P&L – This is the profit or loss from stocks that have been sold.

Unrealised P&L – This is the current profit or loss from stocks that are still in the portfolio.

Total P&L = Realised P&L + Unrealised P&L

Example: Monthly Rebalancing

Suppose you invest ₹20 lakhs on 1st December 2023 and set rebalancing to happen on the 1st of every month.

I quickly ran a sample strategy using this approach, and the data is shown below.

You can export this data in CSV format. It includes trade details, date-wise progression of realised, unrealised, and total P&L, along with monthly and yearly P&L breakdowns.

Below is an explanation of the calculations.

On 1st January 2024:

• Total profit = ₹1,94,697.60
• Monthly return = 9.73% (₹1,94,697.60 ÷ ₹20,00,000 × 100)
• New portfolio value = ₹21,94,697.60

 

On 1st February 2024:

• New total profit = ₹3,42,266.10
• Net P&L for February = ₹1,47,568.50 (₹3,42,266.10 – ₹1,94,697.60)
• Monthly return = 6.72% (₹1,47,568.50 ÷ ₹21,94,697.60 × 100)
• New portfolio value = ₹23,42,266.10

 

On 1st March 2024:

• New total profit = ₹6,15,093.40
• Net profit this month = ₹2,72,827.30 (₹6,15,093.40 – ₹3,42,266.10)
• Monthly return = 11.65% (₹2,72,827.30 ÷ ₹23,42,266.10 × 100)
• New portfolio value = ₹26,15,093.40

 

Yearly P&L

Yearly returns are calculated based on the portfolio value at the end of the previous year.

In the above example,

• Starting capital at the beginning of the year: ₹20,00,000
• Ending portfolio value: ₹34,90,966
• Yearly Profit = ₹14,90,966
• Yearly Return = (₹14,90,966 / ₹20,00,000) × 100 = 74.55%

Next year P&L will be calculated based on the ending portfolio value of the current year.

The same logic applies if there’s a loss instead of a profit in the portfolio.

This method of calculating P&L is consistent across monthly, weekly, or quarterly rebalancing. The simulator also allows exporting detailed data in CSV format, including trade history, realised/unrealised P&L, and period-wise performance breakdowns.