PnL vs ROI: Which Metric Should You Follow?

The Two Most Important Metrics

When evaluating prediction market traders, two metrics dominate the conversation: PnL (Profit and Loss) and ROI (Return on Investment). Understanding the difference is crucial for identifying truly skilled traders.

What is PnL?

PnL (Profit and Loss) is the absolute dollar amount a trader has made or lost. It's the simplest metric: total gains minus total losses.

Example

• •Trader A: $50,000 PnL
• •Trader B: $5,000 PnL

At first glance, Trader A looks more successful. But is that the full picture?

What is ROI?

ROI (Return on Investment) measures profit relative to the amount risked. It's expressed as a percentage.

Formula: ROI = (PnL / Volume) × 100

Example

• •Trader A: $50,000 PnL on $1,000,000 volume = 5% ROI
• •Trader B: $5,000 PnL on $20,000 volume = 25% ROI

Now Trader B looks much more impressive. They're generating 5x better returns on their capital.

When PnL Matters

High-Stakes Environments

If you're managing significant capital, absolute returns matter. A 5% return on $1M is $50,000. A 25% return on $20K is $5,000.

Measuring Impact

PnL shows who's actually moving markets. High-PnL traders have conviction and capital to back it up.

Survivorship

Traders with consistently positive PnL have demonstrated they can survive market volatility over time.

When ROI Matters

Skill Assessment

ROI better reflects trading skill independent of capital. A trader who consistently achieves 20%+ ROI is likely skilled, regardless of position size.

Early-Stage Evaluation

New traders with limited capital can still demonstrate skill through high ROI.

Risk-Adjusted Performance

ROI naturally accounts for how much capital was at risk. Higher ROI means better risk management.

The Oddy Score Approach

Oddy's ranking system considers both metrics (and more):

• •PnL: Shows absolute performance
• •ROI: Shows efficiency
• •Win Rate: Shows consistency
• •Trade Count: Shows experience

No single metric tells the whole story. That's why we combine them into the Oddy Score.

Which Should You Follow?

For Copy Trading

Prioritize ROI. A trader with 30% ROI will likely generate similar returns on your capital (assuming similar position sizing).

For Market Signals

Prioritize PnL. Traders with high PnL have skin in the game and their moves carry weight.

For Learning

Look at both. High ROI traders show you efficient strategies. High PnL traders show you conviction.

Red Flags to Watch

High PnL, Low ROI

Could indicate luck or excessive risk-taking. A $100K profit on $5M volume (2% ROI) might be mostly noise.

High ROI, Low Volume

Small sample size. A 50% ROI on $1,000 volume doesn't prove anything.

Declining Metrics

A trader whose ROI or PnL is trending down may have lost their edge.

Conclusion

Both PnL and ROI provide valuable insights, but neither tells the complete story alone. The best approach is to consider both metrics alongside win rate, trade count, and market focus. That's exactly what Oddy's leaderboard does—giving you a comprehensive view of trader performance.