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| bayeauxguy |
 Posted: Fri Aug 31, 2007 5:38 am Post subject: Churn rate |
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Investing Sr. Associate
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| I've only recently noticed something called churn rate. What does that mean and how do I interpret it? |
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| MEDIC1FF |
| Posted: Fri Aug 31, 2007 7:18 am Post subject: |
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Investing Sr. Associate
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| Churn Rate is the amount of trades you make in a month. Buying OR selling. The higher the rate the more you trade. |
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| bayeauxguy |
| Posted: Fri Aug 31, 2007 7:30 am Post subject: |
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Investing Sr. Associate
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Thank you. It never ceases to amaze me at how helpful you people are. I'm never made to feel like an idiot for asking dumb questions.
Thanks again. |
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| Im Not Warren Buffett |
| Posted: Fri Aug 31, 2007 7:02 pm Post subject: |
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CFO
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| Churn is technically the percentage of your portfolio that is turned over. If you have 10,000 e$ invested in five positions equally, you sell one entirely, and buy something else, then you have "churned" 2,000 e$ or 20% of your portfolio. |
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| prs1065 |
| Posted: Tue Sep 04, 2007 10:03 am Post subject: |
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Investing Manager
Joined: 01 Sep 2007
Posts: 204
This Month: 0
5749.49 e$
Net worth: 49,765.19
Portfolio Value: 44,015.70
Monthly Return: -2.67%
Trades this month: 0
Churn Rate: 0.00%Items
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| i would be over all number of shares gained or loss i think |
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| Dave Rathbun |
| Posted: Tue Sep 04, 2007 4:32 pm Post subject: |
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CFO
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The "formal" explanation is in this topic:
http://www.einvesting.com/viewtopic.php?t=2717
It is not technically a valid implementation of "churn" as defined by most mutual funds. But it was close enough to work for the trading game here. If you don't want the full description from the other topic, here is a summary:
It's a ratio of turnover in your account. Turnover is defined as selling then buying, or buying then selling. If you start a month with one holding and make no trades you have a zero churn rate. If you start the month with one holding and make 100 trades, selling one share at a time, your churn rate is still zero becuase you haven't "turned over" the money into something else.
So churn is a relative measure of trading activity. The more you buy and sell in the same month, the higher your churn rate will be.
It has no effect on your monthly return percentage calculation. |
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