# How to Calculate Gain and Loss on a Stock

Although stocks can be risky investments, there are steps to help you reduce your risk. For instance, research can help you make an educated decision on how specific stocks may perform. But keep in mind that this isn't an exact science. That's because there are many unpredictable factors at play, such as emotions, market behavior, and global events.

As such, a company's stock can be a winner or a loser. Depending on the outcome, you'll have to determine your portfolio's gains and losses. In this article, we help you understand some of the basics of calculating gains and losses, including some of the tools available to you.

### Key Takeaways

• Stocks can be risky investments but you can determine your portfolio's gains and losses.
• To calculate your profit or loss, subtract the current price from the original price, also referred to as the "cost basis."
• The percentage change takes the result from above, divides it by the original purchase price, and multiplies that by 100.
• A stock profit may not mean anything unless you know how much you need to invest to make that amount of money.
• Many websites calculate gains or losses or you can set up a spreadsheet on Microsoft Excel to do it for you.

## Calculating Gains and Losses

The term gain refers to the overall increase in the value of an asset or investment, such as a stock. Gains occur whenever the current price of the asset is higher than the price at which it was originally purchased. So if you purchased a share of Amazon (AMZN) stock on Sept. 3, 2013, at $288.80 and held it until May 11, 2020, you'd experienced a gain, as the stock closed at$2,409.78.

A loss, on the other hand, is the opposite of a gain. When you incur a loss, it means the current value of an asset or investment is lower than the price at which it was originally purchased. So if you bought a single share of AT&T (T) stock on May 10, 2021, for $32.63 and sold it at$22.17 on Dec. 15, 2021, you'd have a loss.

But how do you calculate gains and losses? To find the net gain or loss experienced for any stocks you hold, determine the difference between what you paid for them and what you sold them for on a percentage basis. To do so, subtract the original purchase price from the current price and divide the difference by the purchase price of the stock. Multiply that figure by 100 to get the percentage change.

Net Gain or Net Loss = (Current Price - Original Purchase Price) ÷ Original Purchase Price x 100

Using the formula with the figures listed in the examples above, you'd have realized:

• A gain of 734.4% for a single share of Amazon
• A loss of 32% for a single share of AT&T

Gains and losses are categorized by the Internal Revenue Service (IRS) as long-term and short-term gains and losses. Long-term ones are realized after holding assets for more than a year while those deemed short-term are realized after being held for less than 12 months.

## Dollar Value Profit or Loss

Let's say an investor buys 100 shares of Cory's Tequila Company at $10 per share for a total investment of$1,000. Suppose they sell those shares for $1700 or$17 each two months later, which means their profit for the trade is $700. Although that may seem like a sizeable profit, it may not mean much unless they know how much they needed to invest to earn that amount of money. For example, suppose the investor also bought 1,000 shares in Rob's Sake Distillers at$10 apiece (for a total investment of $10,000) and later sold those shares at$10.70 each for a total of $10,700. With this trade, they would have profited by$700, yet it took 10 times the investment compared to the other example to earn it.

Fees and other costs can eat away at your profits or add to your losses. Make sure you factor them in when you're considering selling any stocks.

## Calculating Investment Returns

To avoid this sort of profit ambiguity, investment returns are expressed in percentages. The investment in Cory's Tequila Company was made at $10 per share and sold at$17 per share. The per-share gain is $7 ($17 – $10). Thus, your percentage return on your$10 per share investment is 70% ($7 gain ÷$10 cost).

## How Can I Calculate Long-Term Gain or Loss on Stock?

Long-term gains or losses are realized any time you sell a stock that you've held for more than a year. In order to figure out the gain or loss, you need your purchase and sale price for the stock. Subtract the purchase price from the sale price. A positive result means you have a capital gain while a negative result means you have a loss. Your capital gains tax rate depends on several factors, including your income and filing status.

## How Do You Calculate Gain or Loss Percentage on Stock With a Calculator?

You'll need the original purchase price and the current value of your stock in order to make the calculation. Subtract the total purchase price from the current price of the stock then divide that by the original purchase price and multiply that figure by 100. This gives you the total percentage change.

## The Bottom Line

Calculating your profit or loss on your stock holdings is a fairly straightforward procedure. It's as simple as calculating the percentage change between a beginning value and an ending value. When calculating your profit or loss, make sure you look at the percentage return as opposed to the dollar value.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
1. Internal Revenue Service. "Topic No. 409 Capital Gains and Losses."

2. Babypips. "Gain & Loss Percentage Calculator."

3. Omni Calculator. "Percentage Increase Calculator."

4. Omni Calculator. "Percentage Decrease Calculator."

5. CalculatorSoup. "Percentage Increase Calculator."

6. CalculatorSoup. "Percentage Decrease Calculator."

7. Percentage Change Calculator. "Calculator."

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