Cash flow (deposit or withdrawal)

Money you move into or out of your portfolio — not a gain or a loss.

In measuring performance, a cash flow is a deposit or a withdrawal: money that changes the balance without being earned or lost by your investments. A $1,000 deposit raises the balance by $1,000 and the return by nothing.

This is why the balance is not the return, and why the time-weighted return measures each stretch between cash flows separately.