A percentage return makes results with different starting capital easier to compare by dividing the gain or loss by the relevant invested amount. The calculation should identify its period, cash flows, fees and whether open positions are valued at current prices.
Return does not describe the path taken to reach the ending value. Two strategies can report the same percentage while having very different drawdowns, trade counts, liquidity and exposure to rare losses.
ELI5
Investment return tells how much an investment gained or lost compared with the money put to work. It is often shown as a percentage over a specific period.
For example, a $100 profit on $500 of capital is a 20 percent return before any excluded costs. The percentage becomes meaningful only when the time period, fees and risk are also clear.
