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How Stock Profit Is Calculated
Stock profit is the difference between the total sale proceeds and the total cost basis. The cost basis includes the purchase price of all shares plus any buying commissions. Net profit subtracts selling commissions as well. The formula is: Profit = (Sell Price - Buy Price) × Shares - Buy Commission - Sell Commission.
Understanding Return on Investment (ROI)
ROI measures the percentage return relative to your total investment. It is calculated as (Net Profit / Total Cost) × 100. A positive ROI means you gained money; a negative ROI means a loss. ROI helps compare the profitability of different investments regardless of the dollar amounts involved.
Frequently Asked Questions
This calculator shows the gross profit before taxes. Capital gains taxes depend on how long you held the stock. Short-term gains (held less than one year) are taxed as ordinary income. Long-term gains (held over one year) are taxed at 0%, 15%, or 20% depending on your income.
Commissions reduce your net profit directly. Many modern brokers offer commission-free trading, but some charge per-trade or per-share fees. Enter any fees in the commission fields to see their impact on your return.
If the sell price is lower than the buy price, the calculator will show a negative profit (loss). Stock losses can be used to offset capital gains on your taxes, and up to $3,000 in net losses can be deducted against ordinary income per year.