Return On Investment
Return on Investment (ROI) is known as a “metric”, a number that is intended to measure something. The “something” that ROI measures is the profitability on the picks you make, which basically tells you how effectively you are using your money to generate a profit. The higher the ROI, the better you’re doing!
|Matchup||Pick||Result||Odds||Risk||Profit||Balance Before Pick||New Balance|
|Chicago VS Vancouver||Vancouver||Win||-110||25||22.73||100||122.73|
|New York VS Phildelphia||New York||Lose||+140||15||0
|Atlanta VS Carolina||Carolina||Win||-190||40
|Montreal VS Pittsburgh||Montreal||Win||+120||50||0||128.78||188.78|
To calculate your ROI, you first need to figure out if you’re up or if you’re down, and by how much. In the example above, we started with a balance of 100. After making 4 picks, our balance was 188.78. In dollar terms, we have a profit of 88.78. That’s the first piece to know.
The second piece of the puzzle is adding up everything you risked to generate that profit. For the 4 picks we made, we risked a total of 130.
To calculate the ROI, use this simple formula:
ROI = Profit (in dollars) / Total Amount Risked to Generate Profit (in dollars)
ROI = 88.78 / 130 ROI = 68.29%
Notice that the ROI (68.29%) is not the same as our picking rate (75% for 3/4 matchups picked correctly).
Takeaway: ROI is a measure of how effective you are generating a profit with the amount you are risking to generate that profit.