Why add 1 to strategy return?

Quant Trading Strategies & Ideas
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Course Name: Day Trading Strategies for Beginners, Section No: 5, Unit No: 10, Unit type: Notebook



Why add 1 to strategy return?

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I hope you are asking about the cumulative Strategy Returns, because we compound the returns over a period of time and every time to calculate the new cumulative value we have to add the return to the previous value so the formula becomes, (1+R%).cumprod(). As we see in the formula of compound interest, the new amount is always calculated taking into consideration the previous principal amount.
 
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Thanks for your answer. I understand know, its about the amount not the difference.