How To Calculate Profit And Loss in Stocks?

Stocks are fascinating for people interested in growing their wealth through unconventional methods. But for someone who's only starting, the biggest challenge they often face is calculating their profit and loss so that they know whether something works for them. This task becomes even more daunting if they have multiple investments in their portfolio. This is where a stock calculator comes in handy that can quickly determine the returns on their investment, and in this blog post, we have made a step-by-step guide on how to do it.

Step 1: Enter the cost of the purchase

The purchase price is the money you spend to purchase the shares. Your trade confirmation or brokerage statement will provide this information. Put this cost into the stock calculator's "Purchase Price" field.

Step 2: Enter the selling price

The selling price is the price you sold the stock for. This can also be found on your trade confirmation or brokerage statement. Enter this price into the "Selling Price" field in the stock calculator.

Step 3: Enter the number of shares

The number of shares represents the sum of the claims you bought and sold. This is also shown on your brokerage statement or trade confirmation. Enter this figure in the stock calculator's "Number of Shares" field.

Step 4: Calculate your profit or loss

After entering all the required information into their respective fields in the stock calculator, the calculator will run the numbers and automatically calculate your profit or loss. In the case of a selling price higher than the purchase price, the calculator will reflect a profit; on the other hand, a selling price lower than the purchase price reflects a loss.

Step 5: Determine your break-even point

A stock calculator can assist you in determining your profit and loss and the break-even point for a particular investment. The price at which you will neither make a profit nor a loss is known as the break-even point. You must enter the purchase price, the number of shares, and the intended selling price into the calculator to get the break-even point.

Benefits of using a stock calculator

Now that we've seen how to use a stock calculator, the question of why to use it remains. Here are some of the reasons why you should ditch the old methods and switch to a stock calculator:

1. Saves time

The conventional method of manually calculating your shares' profit and loss has become obsolete. Why waste your time doing manual calculations when a stock calculator can do the same thing in seconds?

2. Reduces errors

Manual calculations are susceptible to mistakes, which can significantly affect your profits. A stock calculator reduces the possibility of errors and guarantees the accuracy of your estimates.

3. Provides insights

You can learn more about your investments' potential benefits and risks using a stock calculator. You could handle your portfolio more effectively and make more informed decisions.

Also Read: What Are The Advantages of Using Stock Calculator? Explained

In conclusion, a stock calculator is unlike any regular calculator. It is an excellent tool for people who find calculating their profits and losses challenging and want a better and more accurate alternative. So if you are also going through the same problem, give the stock calculator a chance and see how easy it makes for you to manage your investments.