Crypto investment can be a good way to put your money in. You may gain profit and experience loss on it. A mastery of numbers is required to calculate your crypto trading profit and loss. Furthermore, keep in mind that the primary goal of cryptocurrency trading is to profit. You can balance your portfolio by figuring out how much money you made (profits) and lost (losses). How do you make these calculations?
For traders, determining profit and loss is typically one of the most difficult tasks. But since we have already resolved everything, it doesn’t have to be difficult. For the best outcomes, simply read and put this information into practice.
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Things You Should Know About Crypto’s Profit and Loss
You should be aware that cryptocurrency profits and losses are subject to capital gains tax before calculating your net profit and loss.
- Profit tax: If you realize a profit or gain when you sell an asset, you must pay capital gains tax on that amount. Depending on where you live and how long you’ve owned the asset, you’ll pay a different amount.
- Loss tax: If you buy and sell an asset for less than you paid for it, you won’t owe crypto tax on that loss. In most nations, you can, however, carry losses forward to offset against future gains in addition to offsetting these losses against any capital gains.
3 Easy Ways of How to Calculate Crypto Profit
Using the following methods, you can begin figuring out how much you made and lost from trading cryptocurrencies:
1. Reduce the cost price by deducting the selling price
One of the simplest methods of how calculating crypto profit and loss is this one. All you need to do is deduct or subtract from the price of cryptocurrencies you paid for the cryptocurrency that you received when you sold it.
Let’s use Bitcoin (BTC) as an example. Assume Bitcoin is currently trading for $10,000. You invested $10,000 in Bitcoin and sold it when it reached $15,000.
In this case, you want to subtract the cost price (the price at which you purchased it) from the selling price. That is, you will subtract $10,000 from the selling price of $15,000. The difference ($5,000) is your profit.
You can also calculate your loss using the same model. Assume you paid $10,000 for Bitcoin in this case. However, it plummeted to $8,000, and you were concerned that the price would fall even further. So you sold for that amount. This means you lost $2,000 in total.
2. Apply Unrealized Gain
Because the cryptocurrency market price is unstable, some traders are eager to take profits and exit. The traders can determine for themselves whether they are winning or losing on their trades by keeping a close eye on the market. A trader may not be able to see the big picture, though, if they become fixated on the market’s ongoing fluctuations.
Assuming you purchased Ethereum (ETH) for $2,000, simply keep a close eye on the market. If the price of ETH rises to $2,200, you have already made $200. The only distinction between this and the subtraction model is that you have not yet sold.
However, once your order is filled, the price of Ethereum (ETH) may fall slightly or even tank. This occurs most of the time when the buy orders exceed the sell orders. For example, if you purchased ETH for $2,000 and it drops to $1,800 after you place your sell order, you have lost $200. This modification will have an impact on your profit and loss calculation after the sale.
3. Multiply to get the profit percentage
The majority of cryptocurrency trading profits and losses are expressed as percentages. Here’s how to do the math. Profits in cryptocurrency trading can be calculated by multiplying by the percentage increase.
Here’s how to do it:
Multiply the price at which you purchased the cryptocurrency (the entry price) by the corresponding percentage expression. The percentage profits between 10% and 50% are expressed as follows:
- 1,1 for 10%
- 1,2 for 20%
- 1,3 for 30%
- 1,4 for 40%
- 1,5 for 50%
Assume you purchased Cardano (ADA) at the initial price of $2. You want to make only 10% of the trade and then exit the market. You will multiply your entry price (the price you paid for your ADA) by the corresponding percentage profit of 10%. To put it another way, $2 (the entry fee) times (x) 1.1 (10%).
That gives you $2.2, where $2 is your initial investment and $0.2 is your 10% profit. If you want to take 50% of the trade’s profit, you can also take similar action. In this case, the equation is $2 x 1.5 = $3. Take out your $2 capital. You are left with half of the capital, which is $1.
You can, however, calculate a 100 percent gain/profit by doing the following: $2 x 2 = $4. When multiplying by a hundred, the general rule is to add the number “1.”
3 Profit Calculator Websites You Can Use
If you still can follow the guidelines above in calculating your profit on crypto, you may need other simple tools. Calculating your investment in crypto can be a good way to see long-term prospects. These are the 3 free cryptocurrency calculators you can try.
1. Influencer Marketing Hub
The first crypto calculator you can use is Influencer Marketing Hub. If you know when you bought your cryptocurrency and how much you put into it, you can use this calculator to figure out how much profit you’ve made.
To convert between different cryptocurrency types, simply click the one you want to convert to. The final figure will reflect the present value of your initial investment and any subsequent earnings. The investment value graph is another handy feature of this calculator.
The second calculator for the crypto you can use is Marketmegood.com. Currently, the US dollar, the Euro, and the British pound are the only currencies that work with this calculator. The initial date will be January 1, 2011.
You can use this tool by picking your preferred currency, entering an assumed investment amount, picking a month and year, and then hitting the submit button. Profits and return on investment are what will be reported.
The third crypto profit calculator you should try is Criptomo. This crypto profit calculator will help you estimate how much money you may have gained if you’re investing in cryptocurrency instead of other assets. Enter the initial investment amount in US dollars or Euros, choose your desired cryptocurrency, and choose the purchase date and time on our Bitcoin calculator.
To see the investment fee and coin price, click the calculate button. The correct ticket number can be used with any cryptocurrency, even if it isn’t selected in the dropdown menu. As an alternative to Ethereum, you might enter ETH.
One of the essential skills that will help you become a better trader is the ability to calculate your revenue and losses. Furthermore, you can try to control your greed in order to increase your profits and stop losing money. This guide on how to calculate crypto profit should be your best reference to find out how your crypto works.