Gross vs net

Also seen as: gross P&L and net P&L; before costs and after costs.

What is the difference between gross and net?

Gross is the raw result and net is the result you actually kept. Both describe the same trades over the same period; only the treatment of costs differs, and one subtraction turns one into the other.

where Gross is the trading profit or loss before any cost deduction, Costs are the trading fees and slippage charged on those trades, and Net is what remains. Because costs can only ever be a deduction, net is never larger than gross.

What sits inside the Costs figure?

Costs on a position are its trading fees plus its slippage — the two charges that come from the act of trading. Tax and financing are not in this figure: tax on dividends and realized gains, and interest received or paid, are separate results that appear on their own bands of the P&L breakdown rather than inside a position's Costs.

Slippage is not a fee. It is the gap between the price the strategy targeted and the price it actually got, so it is a cost of execution rather than a charge anyone bills you — but it lands in the same Costs figure, because in both cases the money is gone before the result is measured.

How do you read the sign of the Costs column?

Costs are shown as a positive deduction — a cost of 40 appears as 40, not as −40, and you subtract it from Gross to reach Net. The one invariant to read the three columns by is that Net is never larger than Gross: costs can only take away, so if the Net cell is above the Gross cell on the same row, you are not reading a cost.

One thing that does look wrong but is not: each cell rounds independently, so the three displayed figures need not add up to the last decimal. A true Gross of 500.4, Costs of 40.6 and Net of 459.8 print as 500, 41 and 460 — and 500 − 41 is 459, not the 460 on screen. Nothing was lost; the display simply rounded three times instead of once.

Defaults in Fincanva

• A backtest reports Gross, Costs and Net next to each other at every level of detail — per symbol, per position, and per individual trade — so the same three-column reading works whether you are looking at a whole instrument or one fill.
• Costs are trading fees plus slippage, in the account's base currency; the figures are money, not percentages.
• Whether costs are charged at all follows the Costs & interests simulation assumption, which is off by default. With it off, modelled costs are zero and gross and net read the same; with it on, they separate.
• Gross and net describe trading results, so dividends are counted separately — a position's dividend income is its own column, and net plus that income is what makes up its Total P&L.

Worked example

A position is closed with a raw trading gain of 500. It paid 12 in trading fees and 28 in slippage over its life — 40 of cost in all, shown as a positive 40 in the Costs column. Net is 500 − 40 = 460: the position made 500 on price and kept 460 after the cost of trading. Read the three columns together and that 40 is the whole story of the difference. A gross figure that looks strong can still net poorly when a strategy trades often enough for fees and slippage to accumulate.

These figures describe what a strategy would have done on historical data, not what it will do. Fincanva provides no financial advice — see Is this financial advice?.