How trading profit and loss is calculated
Profit or loss starts with the price change multiplied by your position size. A long position profits when the exit price is above the entry; a short position profits when it is below. That is the gross P/L.
Then come the costs: commissions or exchange fees on the way in and out, funding or swap charges for holding the position, and anything else your broker bills. Subtract them and you have net P/L — the number that actually changes your account balance.
Profit and loss formulas
Percentage fees are charged on the value of each transaction, so the exit fee depends on the exit price. The calculator accounts for this when it solves for the break-even price.
Worked example
- Buy 10 shares at 100 → entry value 1,000. Sell at 110 → exit value 1,100.
- Gross profit = (110 − 100) × 10 = 100.
- Fees of 0.1% per side: 1.00 on entry and 1.10 on exit.
- Net profit = 100 − 2.10 = 97.90, a 9.79% return on the position's value.
Short example: sell 10 at 100 and buy back at 90 — gross profit is (100 − 90) × 10 = 100. The formula is mirrored, the result has the same size.
Break-even price
Because you pay costs in both directions, price must move slightly in your favour before a trade is profitable. The break-even exit price solves the net P/L equation for zero:
“Fixed costs” are the entry fee, any fixed exit fee, funding and other costs. On the chart above, the break-even line shows exactly where the net P/L curve crosses zero.
Return on position vs return on account
A 10% gain on a position is not a 10% gain on your account. If the position was worth 2,000 in a 20,000 account, a 10% move adds 200 — a 1% account return. Leveraged positions work the other way: a 2% move on a position worth five times your account is a 10% account move.
Enter your account balance in the optional section to see both numbers. For planning how large the position should be in the first place, use the position size calculator.
Common P/L calculation mistakes
- Forgetting the exit fee. Many traders only count the commission shown at entry. Round-trip costs are what matter.
- Ignoring funding on held positions. Perpetual futures funding, overnight swaps and short borrow fees accumulate. On multi-week trades they can exceed trading fees.
- Computing short P/L like a long. For a short, a falling price is profit. Using exit − entry gives the right size with the wrong sign.
- Measuring returns against the wrong base. Report account return when comparing to benchmarks; report return on position when comparing trades.