A round turn is essentially a completed transaction where there is both a buy and sell of the same commodity. A round turn is used by futures traders to track the total number of completed trades (buy and sell) in a given year. Another term that is often mentioned in the same breath as “round turn” is “round turn per million”.
Round Turn Per Million
Round turn per million represents the number of trades (in and out) that a CTA program trades on an annual basis, based on a $1 million account. In layman’s terms, round term per million is calculated by counting the number of round turns trades (opened and closed trades) per $1 million invested. Round turn per million is a statistic that is mostly used by managed futures advisors.
Now, once you have your round turns per million number, (number of round turns completed per million dollars) you can multiply that by two to achieve the total number of contracts traded per million dollars. Remember, a round turn is both a buy and sell counted as one, so to get the total number of contracts traded you have to count a buy or sell as its own entity.
Standard Round Turn Lot
Another term used to track trades is a “standard round turn lot”. Now that phrase is made up of two different terms. First, a standard lot, which is usually considered a trade that includes 100,000 units of base currency (USD/euro/JPY). So, in order to count a trade as a standard round turn lot, you must open and close a position that was originally purchased with at least 100,000 units of base currency.
If you have any questions or would like to learn more about round turns, please reach out to one of our highly trained RJO Futures Brokers and the will gladly assist you.