Millions of people across the globe earn good money by trading in cryptocurrency exchanges, swapping and trading crypto and mining cryptocurrency. In any way, it’s a lucrative sector and a thriving business.Even in the face of downs and ups which the entire cryptocurrency industry is bound to experience experienced traders generally make an income. One of the most difficult things even for skilled traders is knowing how to calculate cryptocurrency gains.
Since cryptocurrencies are always up in value, it’s important to diversify your portfolio. It’s generally advisable to invest in some of the biggest and most popular cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash, Ripple, and several other cryptocurrencies. In addition, it’s a good idea to diversify as wide as you can, trying to profit from the latest opportunities that occur, like ICO’s and IDO’s and, consequently, new coins and cryptocurrency.
When you’re buying, trading, selling exchange, swapping, or mining, it’s essential to understand how to calculate profit. Here, we’ll examine the most efficient ways to calculate your profits to ensure that you have an idea of how much profits you’ve made with each transaction.
There Are Different Ways to Calculate Your Profit and Loss in CryptoStart making a list of the money you made and also the amount you lost when trading in crypto by using the following strategies:
· Subtract the selling price from the Cost
It is one of the most straightforward ways to calculate your loss and profit in the field of crypto. All you need to do is subtract the amount you sold the cryptocurrency for from the price you purchased it for. Let us give an illustration that uses Bitcoin (BTC). Let’s suppose that Bitcoin is being traded at $10,000. You purchased BTC at $10,000, then sold it when it jumped to $15,000.
In this instance, you’ll need to subtract costs (the price you purchased the item for) from the price you sell it at. This means that you subtract the cost price that is $10,000 off the price at which you sell it for $15,000. The remaining ($5,000) represents your profits.
You could also apply the same method to determine your loss. Let’s say, for instance, let us suppose that you purchased Bitcoin for $10,000. Then, it plummeted to $8,000 and you were worried that it would fall more. Therefore, you decided to sell it at the same price.
- Use Unrealized Profit
At times, cryptocurrency traders are eager to make profits and leave the market since it’s highly volatile.Monitoring the market allows traders to know for themselves if they are making money or losing money on their trades. However, focusing on the constant fluctuations in the market can prevent traders from seeing the full picture.
If you purchased Ethereum (ETH) in the amount of $2000, be on the lookout for the market. When the cost of ETH rises to $2200 this means that you’ve already made $200.The one difference between this model and Subtraction is the fact that it’s not as if you haven’t sold your product yet.
However, the cost for Ethereum (ETH) could fall a bit or drop once your order has been full. It happens typically when buy orders are more expensive than sell orders. For instance, If you purchased ETH at $2,000, and it is reduced to $1,800 when you make the sell order, this implies that you lost $200. This will impact the calculation of your profit and loss following the sale.
· Multiply to Get the Percentage Profit
A large portion of profits and losses made from trading in cryptocurrency are reported as percentages. Here’s how you determine the following:
You can calculate the profits from trading in cryptocurrency by multiplying the percentage increase.
Here’s how to do it:
Multiply the amount you purchased the cryptocurrency at (entry cost) by the percentage formula. The percentage of profits between 10 and 50% is calculated in this manner:
- for 10 for 10
- for 20 per cent
- for 30 for 30
- for 40 per cent.
- for 50 for 50
Let’s suppose that you bought Cardano (ADA) for a starting rate of 2 dollars. You intend to only make a 10% profit and leave the market. What you need to do is multiply the entry price (the price you purchased an ADA for) by the percentage of profits for 10 per cent. It’s the $2 (entry cost) divided by (x) 1.1 (10 percent).
This gives you $2.2 which is your capital. $0.2 is the profit you earned.
You could also perform the same thing in case you wish to earn 50% of the profits from trading. In this scenario it is $2 1.5 x 1.5 equals $3. Take out the capital amount of $2. The remaining amount is 50% of your capital which is $1.
- You can also calculate profit or gain 100% using this formula $2 + 2 = $4.
- The standard is to add “1” every time you would like to multiply it by 100.
· Use a Spreadsheet
It is possible to organize all of the gains you made as well as the losses that you experienced through trading in cryptos using an excel spreadsheet.
- You can arrange it into categories, for example:
- Names of coins that you exchanged
- The units were traded
- The amount that was spent to purchase the coins
- How much did you trade the coins to
- The date that you traded them
· Consider Using Cryptocurrency Calculators to Calculate Your Profit and Loss
Do you think that a spreadsheet is boring? Or that the model of subtraction or percentage profit is too demanding?You can also use one of the cryptocurrency calculators available online to determine the amount you made and the amount you have lost through cryptocurrency trading.