Calculating your cryptocurrency trading profit and loss requires a thorough understanding of the numbers. In addition, remember that the fundamental purpose of trading cryptocurrency is to earn money. To maintain a healthy portfolio, it's a good idea to keep track of your earnings and losses. Visit multibank.io
But how exactly do you go about doing this?
One of the most difficult things for traders to perform is calculating profit and loss. It doesn't have to be difficult, though, since we've already worked out the details. You'll get the greatest results if you just follow the tips in this article.
Many bitcoin investors lose more money than they gain. Several variables might be to blame, including trading coins that have no genuine use case and failing to take winnings at the right moment. Rule of thumb - Never sell for less than you paid. Make sure to keep this in mind when you begin to use profit and loss techniques in the cryptocurrency market.
Before trading or investing in cryptocurrency, it's a good idea to visit sites like CryptoRunner. It's also a good idea to hedge your bets by purchasing numerous coins. When it comes to exchanging Satoshi for bitcoin or even US dollars, the process is simple.
Ways to Estimate & Calculate Profit and Loss
To begin estimating your profits and losses in cryptocurrency trading, you may use the following strategies:
Deduct Selling Price from Cost Price
This is an easy method to figure out how much money you've made or lost in cryptocurrency. The only thing you need to do is deduct the amount you sold the cryptocurrency for from the amount you paid for it.
Let's look at Bitcoin cryptocurrency as an example (BTC). Assume the price of Bitcoin is $10,000 at the time of writing. When the price of BTC rose to $15,000, you sold your $10,000 stake.
Remove the cost price from the selling price in this scenario. You will deduct $10,000 from the $15,000 selling price. The rest of the money you make ($5,000) is yours.
The same methodology may be used to determine your losses. Let's assume you paid $10,000 for your Bitcoin. However, the price had fallen to $8,000 and you feared it might go considerably more. That's what you got for it, therefore that's what you made. A total loss of $2000 is an outcome.
Use Profits That Were Unrealized
So, because cryptocurrency market is so unpredictable, some traders are tempted to grab gains and exit the market. Keeping a close watch on the market allows traders to see exactly how their deals are going in real time. A trader's ability to perceive the big picture might be hindered by focusing about market fluctuations.
If you purchased Ethereum (ETH) for $2,000, keep an eye on the market. To put it another way, the price of Ethereum has already gone up by $200. The only difference here from the subtraction model is that you haven't sold yet.
However, the price of Ethereum (ETH) may dip or even sink after your purchase is completed. Most often, this occurs when the number of purchase orders outnumbers the number of sell orders, which is common. Once your sell order is placed, that means you've lost $200 if ETH drops to $1,800 after you've purchased it for $2,000. Profit and loss will be affected because of this modification.
Calculate Profit as A Percentage by Multiplying Your Results
Most bitcoin trading earnings and losses are reported in percentages. The following steps will show you how to do the calculation. Cryptocurrency trading profit may be calculated using the percentage gain. This is how you accomplish it:
Using the percentage expression, multiply the amount you paid for the cryptocurrency price by that percentage. Profit margins ranging from 10% to 50% are denoted 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 its launch price of $2. Just 10% of the deal is all you want to do, and you want to get out. You'll need to double your initial investment (the price at which you purchased your ADA) by the 10% profit margin. A $2 registration fee multiplied by (x) 1.1 equals $2.1 (10 percent).
That gives you a total of $2.2, which includes your capital of $2 and your 10% profit. A similar strategy may be used if your goal is to make 50% on the deal. $2 x 1.5 = $3 is the answer in this example. Remove $2 from your bank account. Half of the capital, or $1, is all that's left for you to manage. It's possible to get 100% profit by multiplying $2 by two: $4. One hundred times, multiply by "1" and you'll have your answer.
Put Spreadsheet to Work for You
Using a spreadsheet, you can keep track of all your cryptocurrency trading wins and losses. All of this may be broken down into subsections, like:
What was the name of the currency you traded?
What are the exchanged units?
What is the total cost of the coins?
How much did you get for the coins?
What is the date that you exchanged them?
Review your entrance and exit pricing once you've finished the game. You'll know whether you earned or lost money at the end of the day. It's a good idea to have some emergency funds on hand in case you do end up losing money. In a pinch, a service like GetCash.com may be able to provide you with some quick cash. Using the platform, you may make a finance request and get in touch with pre-screened lenders in their network.
Do Some Analysis Using Online Cryptocurrency Calculators
Do you find spreadsheets tedious, or the percentage profit or subtraction models complicated?
Check your profit and loss from crypto trading using one of the many online cryptocurrency calculators available. Using these calculators, you can quickly see how much money you've made and lost in your crypto trading activities.
Conclusion
You'll be a better trader if you know how to calculate your profit and loss in crypto. One of the most important abilities you can acquire as a trader is the ability to calculate your profits and losses. In addition, you might strive to control your need for more money to avoid losing it.
References:
https://cryptocurrency674842823.wordpress.com/2022/05/16/a-beginners-guide-to-trading-bitcoin/
https://josheph.substack.com/p/which-cryptocurrency-is-best-to-invest?s=r
https://bitbucket.org/joshephlewis/crypto/wiki/What%20is%20cryptocurrency%20mining%3F
https://www.cryptobite.co/how-to-trade-cryptocurrency/
https://joshephlewisjoshephlewis.reblog.hu/the-future-of-cryptocurrency
https://bitcoinov.mn.co/posts/23448309?utm_source=manual
https://mcryptocoin2022.blogspot.com/2022/05/different-types-of-cryptocurrency.html
https://cryptomycurrency.tumblr.com/post/684396802990014464/liquidity-in-cryptocurrency