Understanding your actual earnings from a stock trade involves more than just subtracting the buy price from the sell price. You must account for transactional friction such as brokerage fees and governmental obligations like capital gains taxes. This calculator provides a comprehensive breakdown of your financial performance on any given trade.
Key Metrics Explained
Buy Price: The price per share at the time of purchase.
Sell Price: The price per share at the time of exit.
Commission Fees: Most brokerages charge a flat fee or a percentage per trade. You should include fees for both the entry (buy) and exit (sell) to get an accurate net figure.
Capital Gains Tax: Depending on your jurisdiction and how long you held the stock (short-term vs. long-term), you may owe a percentage of your profit to the tax authorities.
The Stock Profit Formula
The math behind our calculator follows these logical steps:
1. Total Cost = (Buy Price × Quantity) + Buy Commission
2. Sale Proceeds = (Sell Price × Quantity) – Sell Commission
3. Gross Profit = Sale Proceeds – Total Cost
4. Net Profit = Gross Profit – (Gross Profit × Tax Rate)
Example Calculation
Imagine you purchased 100 shares of TechCorp at $150 per share. You paid a $5 brokerage fee to buy. A year later, you sell them for $200 per share and pay another $5 fee to sell. Your tax rate is 15%.
Initial Investment: (100 * $150) + $5 = $15,005
Sale Value: (100 * $200) – $5 = $19,995
Gross Profit: $19,995 – $15,005 = $4,990
Tax: 15% of $4,990 = $748.50
Net Profit: $4,241.50
ROI: 28.27%
Why ROI Matters
The Return on Investment (ROI) is a percentage that expresses the efficiency of your trade. While a $1,000 profit sounds great, it is much more impressive on a $2,000 investment (50% ROI) than on a $100,000 investment (1% ROI). Using ROI allows you to compare the performance of different stocks and asset classes objectively.
Pro Tip for Investors
Always keep track of your "Break-Even" point. This is the price at which your sell value exactly equals your total costs (including all commissions). Our calculator helps you visualize how much the stock needs to rise just to cover your trading fees!