Cryptocurrency, a unit of account for transactions within a decentralized system, offers significant earning potential, thanks to substantial profits it can generate. Since its introduction, cryptocurrency has witnessed rapid growth and broad market acceptance. The act of buying and selling digital currency for profit is called trading. To trade on an exchange and earn money, it's crucial to understand how to calculate profit.
Why Calculate Profits? Cryptocurrency rates can fluctuate hundreds of times in a day. Consequently, the most apparent method to earn money with digital assets is to trade on an exchange. Although trading is prevalent, it necessitates certain skills, including the calculation of potential profit.
How to Determine Crypto Gains/Profits?
Many beginners assume that it's challenging to calculate potential profit. In reality, it's simpler than it appears. So, how to calculate crypto gains using a straightforward formula? Here's how:
To calculate your crypto gain in percentage, divide the current value of the asset by the cost at which you bought it, and then multiply that value by 100.
For example, if the purchase cost was $30 and the current cost is $50, your profit percentage will be 50/30 = 1.67*100 = 167%. This equates to a 167% return.
Quickly calculating crypto profit in percentages is achievable, but remember, the cost can fluctuate based on the trend, so monitor quote dynamics.
For day traders, another method to calculate crypto profit/loss is:
Suppose you bought coins for $100 and intend to sell them for $150. The assumed gain is $50.
Subtract the trading cost from this amount to obtain the net crypto profit.
Remember, the cost of buying/selling includes not only the price of the asset but also any transaction fees.
Some enthusiasts choose to calculate their unrealized crypto profit (gain that hasn't been realized yet). How can you calculate such a profit? It's the difference between the cost at which you bought the asset and its current cost. While this shouldn't be your only guide, it can estimate the success of your activity.
Yet another way to calculate crypto gain is to multiply your investment by the percentage of asset growth in decimal form. For example, if you invested $3,000, and the currency quotes increased by 30%, the crypto profit will be 3000*0.3 = $900.
So, why calculate crypto profit and loss? Knowing your profit and loss on each asset is the only reliable way to determine your portfolio's performance.