Calculate profit and loss for stock trades with precision. Includes commission costs, percentage returns, and break-even analysis for both long and short positions.
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Common approaches to stock trading and their profit/loss characteristics
Buy and sell stocks within the same trading day to profit from short-term price movements.
Hold positions for several days to weeks, capturing medium-term price swings.
Buy undervalued stocks and hold long-term for fundamental appreciation.
Invest in companies with strong growth potential, often at premium valuations.
Common questions about stock trading and profit/loss calculations
For long positions: Profit/Loss = (Sell Price - Buy Price) × Number of Shares - Total Commissions. For short positions: Profit/Loss = (Short Sell Price - Cover Price) × Number of Shares - Total Commissions.
Example Long Trade:
Buy 100 shares at $50, sell at $55 = ($55 - $50) × 100 = $500 gross profit
Long positions profit when stock prices rise - you buy first, then sell. Short positions profit when prices fall - you sell borrowed shares first, then buy them back later at a lower price.
Long Position:
• Buy → Hold → Sell
• Profit when price rises
• Limited loss (maximum 100%)
Short Position:
• Borrow & Sell → Buy Back → Return
• Profit when price falls
• Unlimited loss potential
Short selling requires margin approval and carries higher risk due to unlimited loss potential.
Many major brokers now offer commission-free stock trading, but other fees may still apply depending on the trade type and broker.
Free: Most stock trades at major brokers (TD Ameritrade, E*TRADE, Schwab, Fidelity)
Fees May Apply:
• Options: $0.50-$0.65 per contract
• International stocks: $5-$25 per trade
• OTC/Pink Sheet stocks: $5-$7 per trade
• SEC regulatory fees: ~$0.008 per $1,000 sold
Always check your broker's current fee schedule as policies change frequently.
Your break-even price accounts for all trading costs. For long positions, add total commissions to your buy price. For short positions, subtract total commissions from your short sell price.
Long Break-even:
Buy Price + (Total Commissions ÷ Shares)
Example: $50 + ($10 ÷ 100) = $50.10
Short Break-even:
Short Price - (Total Commissions ÷ Shares)
Example: $50 - ($10 ÷ 100) = $49.90
The stock must move beyond your break-even price for the trade to be profitable.
Returns vary greatly depending on your trading strategy, time horizon, and risk tolerance. Here are some general benchmarks:
Annual Benchmarks:
• S&P 500 historical average: ~10% per year
• Conservative target: 6-8% per year
• Aggressive target: 12-15% per year
Day/Swing Trading:
• Small wins: 0.5-2% per trade
• Medium wins: 2-5% per trade
• Large wins: 5%+ per trade
Focus on consistent, risk-managed returns rather than chasing high-percentage gains.
Most professional traders recommend risking no more than 1-2% of your total account value on any single trade to preserve capital long-term.
Risk Management Examples:
• $10,000 account: Risk $100-200 per trade max
• $50,000 account: Risk $500-1,000 per trade max
• $100,000 account: Risk $1,000-2,000 per trade max
Position sizing formula:
Shares = Risk Amount ÷ (Entry Price - Stop Loss Price)
This approach helps you survive losing streaks and compound gains over time.
Yes, stock trading profits are subject to capital gains taxes, with different rates depending on how long you hold the position.
Long-term (1+ year):
• 0%, 15%, or 20% tax rate
• Based on income level
• More tax-efficient
Short-term (<1 year):
• Taxed as ordinary income
• 10%-37% tax rate
• Higher tax burden
Consult a tax professional for advice specific to your situation and jurisdiction.
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