Just like any other business, cryptocurrency trading is also a business. So if you want to be really good at trading crypto, you have to calculate profit and loss from it. But not many novice crypto traders know how to calculate profits and losses from crypto trading. If the same thing happens to you, I’m here to help you.
In this post, I will walk you through how much you have made and how much you have lost trading cryptocurrencies. So you can balance your portfolio.
So here we go:
a little advice
Before we get into the article, here’s a little tip. Most novice cryptocurrency traders lose money without making a profit. There are a few reasons why it happens.
Like most new investors, they invest in coins that have no real use case. As a result, the value of the currency does not actually increase over a period of time.
Another reason could be that they panic when they see the market go down a bit.
Even many novice traders start your investment journey through trading with Binance Futures, not knowing what exactly it is. As a result, they end up losing a ton of money.
However, the general rule of trading is to never sell your assets at a loss. Also, be sure to invest money you can afford to lose. Only in this way, you will be able to earn profit from cryptocurrencies. Also, be sure to write down both your losses and your gains.
How are profits and losses calculated from Crypto Trading?
1.Subtract the selling price from the cost price
Subtracting the selling price from the cost price is the easiest way to calculate profit and loss. All you have to do is remove/subtract the amount you sold the crypto for from the amount you bought it for.
For example, if you bought BNB for $130 USD and sold it for $200. So in this case, you are removing the cost price or the price you bought BNB from the selling price, which is $200. And now there is a gap of $70 which is your profit.
You can use the same formula to calculate your losses. For example, if you bought BNB at $130 and sold it at $100, then there is a gap of $30 which is your loss.
two.Use unrealized profit
Cryptocurrency traders often get impatient and decide to take profit and exit the market even when the market is going up. Or crypto traders don’t sell their assets when they should. Since the cryptocurrency market is volatile and anything can happen. Therefore, it is important that you keep monitoring the market.
However, speaking of the calculation in this case, if you bought BNB at $130 and it jumped to $150, you already made a profit of $20.
But the thing is, you haven’t sold your assets yet. And the price of BNB may drop a bit or go below the price at which you bought the coin. For example, if you bought BNB at $130 and the current trading price is $100, you lost $30. However, as long as you don’t actually sell your funds, you’re not really at a loss.
3. Multiply to get profit percentage
Most of the cryptocurrency traders prefer the percentage to calculate their profit and loss. To do so, you can calculate your cryptocurrency earnings by multiplying the percentage increase.
This is how you can do it:
You need to multiply the price at which you bought the crypto (entry price) by the corresponding percentage expression. The utility percentages between 10% and 50% are expressed as follows:
For example, if you bought BNB at your entry price of $2, you want to get only 10% of the trade and sell your assets.
In this case, you need to multiply your entry price by the corresponding profit percentage of 10%.
So that would be $2, your entry price multiplied by 1.1 to get your exit price. So the value of his assets would now be $2.2 minus the entry price, and he made a profit of $0.2.
The general rule is to add the number 1 every time you want to multiply by one hundred.
4. Use a spreadsheet
Using a spreadsheet to calculate profit and loss would be the wisest idea. You can organize everything about profits and losses using simple spreadsheet formulas.
You can organize your spreadsheet in these columns:
- Name of the cryptocurrencies you have bought.
- How much of the assets do you want?
- Your entry or purchase price of the coins.
- At what price did they sell their cryptocurrencies?
- The date you exchanged your coins.
For this, you can use Google Sheets you can get the live market data. As a result, you will know if you have won or lost money.
5. Use a cryptocurrency calculator
Using a spreadsheet is great. But it can be too complicated to fill in all the formulas and manage them.
Instead, you can use a cryptocurrency calculator. There are so many online crypto calculators available that allow you to check how much you have earned and how much you have lost from crypto trading. One such online calculator is btc.feh.im.
In addition, these calculators make it very easy for us to check the profits and losses that we have obtained.
That was a quick guide on how to calculate cryptocurrency trading profits and losses. In the end, the only advice I would give is to write down the entry price and the exit price. This way you can easily calculate profit and loss with simple plus and minus formulas.
Also, you need to calculate the trading fee you have paid and subtract it from your earnings. The trading fee applies to both your entry trade and your exit trade.