RiskPicksWhat is a Round Trip?
A round trip is the full cycle of a trade: entering a position (buying or selling short) and then exiting it (selling or covering). One round trip equals one complete trade, regardless of how many shares were traded.
Examples
- Long round trip: buy 100 shares of AAPL at $180, sell 100 shares at $182. That is one round trip.
- Short round trip: short 50 shares of TSLA at $250, cover 50 shares at $245. That is one round trip.
- Scaled round trip: buy 200 shares in three lots, then sell all 200 in two exits. Still one round trip.
Why round trips matter
- Pattern Day Trader rule: making 4 or more day trade round trips in 5 business days flags you as a PDT, requiring a $25,000 minimum balance
- Performance tracking: counting round trips gives a clearer picture of trading frequency than counting individual fills
- Commission costs: each round trip incurs commissions and spreads on both sides
- Tax reporting: each closed round trip is a taxable event with realized gain or loss
Round trip vs. open position
An open position is not a round trip until it is closed. A swing trader holding overnight has an open trade, not a round trip. Once they exit, the round trip is complete and the P&L is locked in.
Most trading platforms and journals count round trips as the unit of measurement for win rate, profit factor, and other performance metrics.