How Do You Calculate Profit And Loss To Track Performance

4 min read
Updated: Dec 03, 2022


Tracking your stock market performance is crucial to understanding your potential in the trading field. It is also important because it can give you proper insight into your financial condition.

In addition, tracking your performance means you are scrutinizing your portfolio regarding trading. When you know your portfolio better, you will be able to initiate a better tracking performance together.

But why is tracking performance so necessary in the field of trading?

Well, the trading market is competitive. With the emergence of online trading, the process has become more accessible and, thus, more competitive. Now, if you do not know your trading performance in the current market, you will not be able to verify your position with others.

So, it’s better to go for tracking your performance and prepare a proper portfolio that indicates your position in the current market. Well, you can consider indices for tracking your stock performance by considering specific groups and changes in them.

In addition, it’s a better trading instrument to ensure the fact that you are safe with your trading activities.

How Do You Calculate Profit And Loss?

Profit and loss are the main two aspects of any trading process to ensure the fact: revenue. Revenue comes with your income, and when you remove expenses from it, you will get the profit.

Profit = Revenues – Expenses

To find the profit and loss of your trading process, you will need to consider net gain or loss. In such cases, you will have to look at the instances like money you put in to buy assets, total return, current return, realized return, current investment, and value.

Let’s not get confused.

Let us simplify things for you.

First, focus on the purchase price and then consider the asset’s current value. You will get a difference for sure. For instance, if you purchased a particular stock for $50 one month ago and see the current value of the stock to be $52, then your profit here is [$52 – $50= $2].

Well, that’s not the net gain. So, now you have to divide the difference between the purchased and current prices with the asset’s purchased value. So, the calculation will be [$52 – $50/$50]% = 0.04%.

This is how you understand your net gain or loss.

However, you don’t need to focus on it; rather, you can focus on your full profit or loss, considering the financial year or months that you are in the trading process.

It’s a better process to find your return on the percentage return of a portfolio. So, consider the total value that you have invested in the stock market so far, and then consider the total return you have gained to date.

Now, following the calculation mentioned above, you will be able to get to know your return on a portfolio, which is basically your ultimate profit, excluding all expenses.

How Do You Track The Performance?

We have discussed calculating the finding and loss of profit. However, tracking your performance does not only consider just the calculation but more than that.

Let’s focus on the basics of tracking your performance in the trading market.

  • Your first responsibility will be to check the stock table.
  • After that, you have to go check your whole trading account statement to collect the transactional data.
  • Next, understand the benchmark.
  • It’s important to be aware of current trading news and feeds.

After you have followed all the instances and also calculated the profit and loss of your trading to understand your performance in the trading market, it’s time to consult with an expert trading advisor. It will help you to re-assess investment decisions depending on your position in the market.


Sophia Rodreguaze


Sophia is the contributing editor at She writes about anything and everything related to technology.

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