The percentage rate of return which, if compounded over the time period of the trading test, would yield the cumulative gain or loss identical to the trading system.

Since trading income does not normally grow at a constant rate, the CAR% calculation smooths the return in order to make in simpler to compare with that of other investment types.

Correct formula:

100% * ( (Final Capital / Initial Capital) ^ (365 / Days in Test) - 1 )

Simplified formula:

Net Profit % * (365 / Days in Test)