ROC is useful as it shows us how leverage enhances our returns. Return on Capital varies by account type due to differing capital requirements for cash accounts, margin accounts, portfolio margin accounts and IRA accounts. ROC in an IRA account is generally lower because of the lack of leverage.As a metric, ROC is useful in that it allows us to equate trades into a “single currency”. Showing how leverage is being used to enhance and maximize returns, e.g. pay 0.5% per month to make 0.5% per day, allows for the most efficient use of capital.
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