Gross Profit & Loss

While Net Profit shows you the final bottom line, Gross Profit and Gross Loss deconstruct that final number into its two raw components.

• Gross Profit: The absolute sum of all money made from every single winning trade in the simulation.
• Gross Loss: The absolute sum of all money lost from every single losing trade in the simulation.

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The Formula

The relationship between these two metrics forms the foundation of almost all trade execution analytics:

Net Profit = Gross Profit - Gross Loss

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Why Isolate Gross Metrics?

Looking purely at Net Profit can hide dangerous underlying mechanics. Imagine two strategies that both generate a Net Profit of ₹50,000.

• Strategy A: Gross Profit of ₹60,000 and a Gross Loss of ₹10,000.
• Strategy B: Gross Profit of ₹10,50,000 and a Gross Loss of ₹10,00,000.

While they end up with the exact same bottom line, Strategy B is wildly inefficient. It is churning massive amounts of capital and taking on extreme risk just to squeeze out a tiny net margin. Without isolating the Gross Profit and Gross Loss, you would be completely blind to the fact that Strategy B is a highly dangerous system. While Net Profit shows you the final bottom line, Gross Profit and Gross Loss deconstruct that final number into its two raw components.

• Gross Profit: The absolute sum of all money made from every single winning trade in the simulation.
• Gross Loss: The absolute sum of all money lost from every single losing trade in the simulation.

​

The Formula

The relationship between these two metrics forms the foundation of almost all trade execution analytics:

Net Profit = Gross Profit - Gross Loss

​

Why Isolate Gross Metrics?

Looking purely at Net Profit can hide dangerous underlying mechanics. Imagine two strategies that both generate a Net Profit of ₹50,000.

• Strategy A: Gross Profit of ₹60,000 and a Gross Loss of ₹10,000.
• Strategy B: Gross Profit of ₹10,50,000 and a Gross Loss of ₹10,00,000.

While they end up with the exact same bottom line, Strategy B is wildly inefficient. It is churning massive amounts of capital and taking on extreme risk just to squeeze out a tiny net margin. Without isolating the Gross Profit and Gross Loss, you would be completely blind to the fact that Strategy B is a highly dangerous system.