How to Calculate Stock Profit and Loss

Understanding Stock Profit

Stock profit represents the money you make when selling shares for more than you paid. Your profit equals the difference between your selling price and buying price, minus any fees or commissions. This simple calculation forms the foundation of investment performance tracking.

The Basic Formula

Stock Profit = (Sell Price - Buy Price) × Number of Shares - Total Fees

This formula gives you your absolute profit in dollars. To find your profit percentage, divide your profit by your total investment and multiply by 100.

What Affects Your Stock Profit

Trading Fees

Brokers charge fees for buying and selling stocks. These fees reduce your profit. Some brokers offer commission-free trading, which helps maximize returns. Always factor fees into your calculations.

Taxes

Capital gains tax applies to stock profits. Short-term gains (stocks held less than a year) face higher tax rates than long-term gains. Your actual profit after taxes matters more than your gross profit.

Dividends

If you received dividends while holding the stock, add these to your profit calculation. Dividends represent real returns even if the stock price stayed flat.

Calculating Stock Loss

Stock loss works the same way as profit, just in reverse. If you sell shares for less than you paid, the difference represents your loss. Include all fees to find your total loss.

Multiple Purchases at Different Prices

When you buy the same stock multiple times at different prices, calculating profit gets trickier. You need to find your average cost per share first. Add up all money spent on shares, then divide by total shares owned. This average cost becomes your baseline for profit calculations.

Use our Average Cost Calculator to handle complex scenarios with multiple purchases.

Why Accurate Calculations Matter

Knowing your exact profit helps you make better investment decisions. You can compare returns across different stocks, identify your best performers, and spot losing positions early. Tax reporting requires accurate profit calculations. The IRS wants to know your capital gains.

Many investors overestimate returns by ignoring fees or forgetting about partial sales. Our stock profit calculator handles these details automatically.

Common Mistakes to Avoid

• Forgetting to subtract trading fees from profit
• Not accounting for dividend income
• Ignoring tax implications when calculating real returns
• Using outdated purchase prices for stocks bought long ago
• Mixing up percentage returns with dollar profits