Definition: This calculator computes the Profit and Return on Investment (ROI) from trading stocks, measuring the financial gain or loss after accounting for buying and selling prices and commissions.
Purpose: Helps investors evaluate the profitability of stock trades, considering transaction costs, and assess the percentage return relative to the initial investment, aiding in investment decisions.
The calculator follows a process to compute the stock profit and ROI:
Stock Profit Formulas:
Steps:
Calculating stock profit and ROI is crucial for:
Example: Selling Price = $50.00, Buying Price = $40.00, Number of Stocks = 100, Selling Commission = $10 (fixed), Buying Commission = $10 (fixed):
A profit of $980 and ROI of 24.44% indicate a successful trade, with a significant return relative to the initial investment.
Example 2: Selling Price = $30.00, Buying Price = $25.00, Number of Stocks = 200, Selling Commission = 2% (percent), Buying Commission = 2% (percent):
A profit of $780 and ROI of 15.29% suggest a moderately profitable trade, with commissions reducing the return.
Example 3: Selling Price = $20.00, Buying Price = $25.00, Number of Stocks = 50, Selling Commission = $5 (fixed), Buying Commission = $5 (fixed):
A loss of $260 and negative ROI of -20.72% indicate an unprofitable trade, with commissions exacerbating the loss.
Q: What is a good ROI for stock trading?
A: An ROI above 10–15% per trade is generally considered good, but it depends on market conditions, risk tolerance, and investment horizon. Consistent positive ROI over time is key.
Q: How do commissions affect stock profitability?
A: High commissions reduce profit and ROI, especially for small trades. Fixed commissions impact smaller trades more, while percentage-based commissions scale with trade size.
Q: Can stock profit or ROI be negative?
A: Yes, if the selling price is lower than the buying price or commissions are high, resulting in a loss and negative ROI, indicating an unprofitable trade.